The
UNIFORM COMMERCIAL CODE is binding law relating to the sale of goods.

RULE:The UCC refuses to refuses to enforce
contracts that omit the quantity to be sold = default quantity of zero!

The
Ucc and Restatement will differ

Sullivan
v, O’connor- (focus on damages and type of recovery)Doctor = plastic surgery Promise was to
make her beautiful but he disfigured her.REMEDIES:

RULE:Expectation interest/ Expectancy
(better place)-put the him in a
place as if the contract had been performed.move the vic to a better
place.Vic will gain wealth.The difference between old nose and
dream nose

i.= actual the contract would have had at time
performed (not hopes)

ii.EX:Lost
profits

iii.Cant give expectation for doctor because medicine
not an exact science and doctors cant promise success

iv.Here you wouldn’t get anything back that was part
of the contract (such as first two operation costs) you would only get the
value of what you expected to have at the conclusionof the contract.

RULE:Reliance Interest (directly as was
before promise)- puts him in good a place he would have been had the
contract not been made plus loss due to reliance

i.Example:pain and suffering

ii.You would get the $ back from first two ops because
you relied on the promise of a good nose

Restitution-
restore to him any benefit he has conferred onto the other party

YOU
CAN ONLY RECOVER ONE TYPE OF INTEREST IN A SUIT!

RULE:
Comparable UCC remedy 1-106 (pg 147)

The
aggrieved party may be put in as good a position as if the other party
had fully performed but no punitive, penal damages etc…

II.Consideration

To
constitute consideration a performance or a return promise must be
bargained for

A
performance of return promise if bargained for if it is sought by the
promiser in exchange for his promise and is given by the promisee in
exchange for that promise

The
performance may consist of

An
act other than a promise

A
forbearance, or

The creation, modification, or destruction of a legal
relation

The performance of return
promise may be given to the promiser or to some other person. It may be given
by the promise or by some other person

A.Rule mostly tends to be consideration or nothing

B.RULE:TWO QUESTIONS OF CONSIDERATION!

1.The
promisor must by his promise be inducing or prompting the promisee to fulfill
contract AND

2.Was
hope of getting her to perform prompting the promise?(Kirksey)

a.The
promisor must be trying to get something out of the arrangement.

b.There
must be a condition of the bargain; No condition then no consideration

Hypo:Father and
daughter estranged and father wants to meet. His says: If you come to lunch
then I will give you a ring.

Good because the condition = she come to lunch and father
had reason (was induced to make the promise to repair the relationship)

Hypo:peace of mind
of the promisor is good enough

Hypo:Can a brothers
mere desire for contact with his nephews be necessary consid.?The court must find a bona fide benefit.

Hypo:Rich man tells
man to follow his directions to store and get himself an outfit on his account,
but changes his mind before bum arrives at store.Not enforceable b/c rich man gets no benefit.

A.Bargain for Exchange

The
performance must be

1.Sought
by the promisor, and

2.Given
by the promisee in exchange for the promise

B.Detriment and Benefit

1.Each
party must suffer a detriment or a benefit

2.Each
the promisors promise and the promises promise or performance must be inducing
the other, but the promisor’s promise must be induced and made because of
the detriment or performance the promise requests of the promisee.

3.Gain
or advantage to the promisor is not needed, in order for consideration to be
present, the promisor must only get what he bargained for.

1.Hypo:Al promised Buster that is he stopped
smoking, Al would give Buster his skis.Thus Buster is suffering a detriment and forbearing smoking and Al suffers
the detriment of giving the skis.There
is an exchange.

4.Detriment
= yielding of a legal right

a.Can
be the form of an immediate act (doing or giving something)

b.Forbearance
(refraining from something)

c.Partial
or complete abandonment ofan intangible
right

d.Can
also be any of the previous three to do in the future

5.The
detriment cannot be only a condition to a gift.

1.Hypo:If you walk over to my car, I will give you
my skis.(This performance is not
inducing the promisor to make the promise!)

6.There
does not have to be an equivalent in the number of promises and performances
provided by each party.

a.Two
exceptions:

i.Consideration unfair due to dishonest, fraud or honest
mistake

ii.Consideration given for a promise has so small a value
that it is considered a gift (nominal value)

C.PROMISOR MUST BE INDUCED BY PERFORMANCE RULE:

The pledge
must prompt the promisee to act in a certain way, and the performance of the
promise must be the inducement (reason) for the promisor’s pledge.

1.Does
the promisor have a reason for making the promise, is he getting something?

2.The
something does not have to be tangible, and the court refuses to measure the
benefit of the promisor’s inducement.

D.Measure of
Detriment and Inducement: RULE:Restatement 81 Even if the promise seems to be MOSTLY A GIFT,
(mostly out of kindness) if any small consideration exists at all, the whole
promise is enforceable.

1.Hypo:Uncle promises nephew $, if nephew refrains
from smoking, drinking.The nephew is
giving up a legal right and thus suffering a detriment.

a.Thus
the promise prompted the nephew to act in a certain way AND the performance
induced the uncle to make the promise

RESTATEMENT
81- the degree of how much the promisor is benefited does not matter.Consideration must simply be a motive.

ii.1.The fact that what is bargained for does not
of itself induce the making of a promise does not prevent it from being
consideration for the promise

iii.2.The fact a promise does not itself induce a
performance or return promise does not prevent the performance or return
promise for being consideration – Ex Bogigian

E.Rule:

1.A
promise is unenforceable if not bargained for.

2.Each
party must agree upon the benefit and detriments

a.Was
there a bargain that would yield a benefit to the promisor?

1.Hypo:Wife signs release of judgment and husband
says this is consideration but court says no because wife did not know and thus
did not agree to the fact that this was to be her benefit and detriment.

F.??? RULE: THE PROMISOR MUST BE AWARE OF THE BENEFIT.Thus this rule will serve to protect those
who don’t know they are making a promise. (Bogigian)

G.THIRD
PARTY RULE:If there is a third
party, ask the same elements: (third party okay restatement 71)

1.What
prompted the promisor to make the promise?

2.Is
the performance being rendered from inducement?

1.Hypo:A wants B to wash car for which A will pay C:

a.A
will benefit from the clean car

b.C
gets $$ for washing (performing)

c.B
merely a third party

d.VALID
AND CONSIDERATION!

H.PAST
PERFORMANCE RULE:NO consideration
for a performance already done in the past.

a.Because
then, the promise would not be induced by performance beacsue it has already
been done.

1.Hypo:Parents had a baby and named him August.A week later grandpa promised that is they
named him August he would give them $5,000. = NO consideration

2.X-lover
promises to care for his x-mistress for her past years of co habitation.The co-habitation has already occurred, thus
cannot be inducing the promise

RULE:If the
promisee suffered the detriment before the promise was made, it cannot be said
the detriment was exchanged for the promise

I.GRATITUTIOUS GIFT RULE:No
consideration is the consideration alleged is obviously a sham or a cover to
appear as consideration but cannot be reasonably conceived as inducing the
promisor when he made his promise.

a.This
type of gift allows only nominal detriment by the promisee

1.Ex:$1.00

1.Hypo:Mistress pays x-lover one dollar for his promise to care for her for the
rest of her life. (no inducement, this detriment by the mistress cannot
conceivably be the inducing reason for the x-lovers promise = a gift

2.Hypo:grandpa
promises you 17 million in return for cookies.HE must sincerely be induced to give the 17 mill for the cookies, thus
thus would normally be considered a gift and only nominal consideration.(The court, however finds ways around this
through promissory estopple)

3.Hypo:I
promise to give you my book.The
promisee feels bad and then promises to give me his coin collection.= no consideration because each promise is
not induced by the performance of the other. The promises are made
independently and = gifts

J.INVALID CLAIM RULE AND Restatement 74 and Fiege v. Boheme

Restatement 74

1.Forbearance to assert or the surrender of
a claim or defense which proves to be invalid is not consideration UNLESS

a.The claim or defense is doubtful because
of the uncertainty of the facts or the uncertainty of the law

b.The forbearing or surrendering party
believes the claim or defense may fairly be determined to be valid.

2.The execution of a written instrument
surrendering a claim or defense by one who is under no duty to execute it is
consideration, if the execution of the written instrument is bargained for,
even though he is not asserting the claim or defense and believes that no valid
claim exists.

3.EXPLANATION:Fiege v. Boehm

Girl was
pregnant and boy made promise to pay child support as long as she would forgo
her claim to file criminal charges against him for bastardy proceedings (child
support).The father allegedgly
acknowledged he was the father, but claims now they never had sex.Aside from the claim (that he is father) he
did promise to pay for expenses and stipulates to this fact, in return for her
not instigating bastardy proceedings.

Even
though the claim turned out to be invlaid (the child was proven not to be his
child)

He is
obligated to pay because

1.He promised to do so, and

2.She genuinely believed he was the father
and thus forwent he right to instigate child support proceedings

Had she not really known the
claim to be invalid, there would have been no consideration.

RULE:When a claim (that one claims is
consideration because they forwent their right to assert the claim) is invalid
we must put it through a two- question test:

1.The claim is now
doubtful or proved to be invalid

(and
thus its power of being consideration is called into question and the
enforceability of the contract at stake)

2.When made part of the contract, (as the
promisee’s detriment) the claim must have in good faith been though to be a
valid claim.

K.PRE-EXISTING DUTY RULE:A detriment by the
promisee is necessary, thus is the promisee is already obliged or required to
do something, there is no detriment and thus no consideration

1.Hypo:Al and Buster make binding promise to give Buster skis if Buster pays Al
$100.Al realizes, however, he ,made a
mistake and undercharged for the skis and asks Buster for an extra $50.Buster feels is he does not agree, he will be
taking advantage of Al and agrees.= NO
consideration for the $50 because Al already has a duty to deliver the skis for
$100.

Restatement
73:Performance of a legal duty owed to
a promisor which is neither doubtful nor the subject of honest dispute is NOT
consideration; BUT a similar performance is consideration if it differs from
what was required by the duty in a way which reflects more than a pretense of a
bargain.

2.Hypo:If a creditor promises to accept only a
portion of what is owed to him in return for the debtor not filing bankruptency
(and thus being protected and the creditor will receive nothing) this will be
sufficient consideration as long as it is expressly stated.

3.Hypo:If the contract presents questions which are
unresolved, then changing a part of a contract(such as adjusting rent) in return for clarifying the part of the
contract no clear = good consideration.

L.PRE
EXISTING DUTY TO A THIRD PARTY:

1.A has a duty to B through a contract with good
consideration, and A promises the same duty to C for another benefit (another
performance by C.) Thus B and C are both performing some detriment or benefit
to A in return for the same duty imposed upon A.No consideration between A and C because A
already owed this duty to B.

MODIFICATION TO CONTRACT RULE: The courts insist (the UCC has an exception where
modification can be made as long as it passes the good faith test) that some
new detriment be found for modifications in contracts to be valid.

RULE:This is to prevent coerced modification

2.Hypo:Fishermen taken out to sea having agreed to contract for $5 per day, but
once out to sea during the short season, the fishermen refuse to work unless
their pay is increased.Foreman agrees
to increase pay. = no consideration because the men had a pre existing legal
duty to perform their work under the contract.

3.Third
party Hypo:Third party offers to pay the fishermen ten percent over what their
contract calls for.This is
consideration because the third party’s benefit is the promisee’s forbearance
not to breach the contract between him and his employer.The third party is thus buying the agreement
not to breach the contract with employer.

RULE:A
promisor and promisee can promise to rescind the contract in return for the
promise not to perform.

RULE:When a
transfer occurs consideration is not required and will be considered a gift
because the transfer has intent and delivery.

4.Hypo:If the
foreman had paid the new salary and then challenged its validity he would have
not been able to get the money back because a transfer has already taken
place.The foreman must refuse to pay.

M.EXCEPTION
TO PRE- EXISTING DUTY RULE:

UCC RULE sale of goods

Restatement 89 Exception:
Services

An agreement to modify a
contract needs no consideration to be binding, the modification must
only meet the GOOD FAITH RULE:

1.Must have a legit commercial reason

2.The other party must voluntarily agree

A promise modifying a duty
under a contract not fully performed on either side is binding

1.If the modification is fair and equitable
in view of circumstances not anticipated by the parties when the contract was
made, or

2.To the extent provided by statute, or

3.To the extent that justice requires
enforcement in view of material change of position in reliance on the
promise.

1.Restatement
89 element #1 RULE:

a.The promise must be made
before the contract is fully performed, and

b.The circumstances
prompting the change must have been unanticipated, and

c.The modification must be
fair and equitable

1.Hypo:A is hit by higher prices that increase his
raw material prices and he wished to raise his price he charges B for the
product.= Modification not
enforceable because increase in raw material prices foreseeable, plus the fact
that B entered into a contract that fixed prices probably for the very purpose
to protect him from price increases. BUT there is a difference between an
expected increase and a drastic and unexpected increase.

N.MUTUALITY OF OBLIGATION- problem occurs where
the promisor claims there was no consideration because the promisee was not
bound to perform.

Both parties must
be bound or neither is bound

Unilateral
Contract v. Multilateral Contract:

Unilateral- A reward obligation
where the promisor will pay IF something happens

(Multilateral-
promise for a promise)

(Restatement
confusing)

Restatement 77:Illusory and Alternative Promises

A promise
or apparent promise is not consideration if by its terms the pomisor or
proported promisor reserves a choice or alternative promises UNLESS:

1.Each of the alternative
performances would have been consideration if it alone had been bargained for

2.One of the alternative performances would have been
consideration and there is or appears to the oarties to be the substantial
possibility that before the promisor exercises his choice events may eliminate
the alternatives which would not have been consideration

Restatement explained:

O.Illusory
Promise can occur in two situations

1.One
of the parties cannot have unlimited discretion so that, really, nothing is
promised.

The argument is that is one party
does not have to perform and is not bound, the other party is not bound by
consideration.

Illusory promise and IMPLIED
Best Effort rule:When a promise is
illusory, contains a loophole allowing a party out with no performance or
detriment, their promise to perform carries the implied promise to use their
best efforts, and thus through this implied promise there exists consideration

1.Hypo:Al and buster agree that Buster will buy Al’s
skis next week for $100 if Buster can secure a loan by then.This promise is illusory on its face because
Buster is really under no obligation to act to secure the loan.This is where the IMPLIED promise of
Buster to use his best efforts to get the loan in time.

a.If
he uses his best efforts but still does not get a loan, there is no contract
and no breach.

b.If
he does not use best efforts, there is a breach in the implied promise to do so
and Buster would be liable for the breach

Hypo:Lucy, a fashion designer, hired a Wood who
was to exclusively work for Lucy and find for her endorsements for which he
would receive half the profits.Lucy
breached when she herself contracted with Sears to endorse.Wood said under contract he was the only one
who could find the clients, and thus he was entitled to half the profits.Lucy said she was not in breach because there
was no contract due to the fact Wood was under no obligation to perform.(the contract was illusory)The court disagreed and said the exclusive
agency by which Wood was employed IMPLIED and obliged him to use his best
efforts to perform, thus there was consideration, thus there was a contract, and
thus Lucy was in breach.

P.EXCLUSIVE
AGENCY IMPLIED BEST EFFORT RULE:When
one is employed under another under exclusive agency, the best effort promise
is implied and thus there is consideration.

Q.(UCC) OUTPUT CONTRACTS:Sale of goods

a.Output and
Requirements contracts:the parties have left the quantity of goods
open ended on the understanding that the quantity to be supplied under the
contract will be determined either by the buyers requirements or by the sellers
output.

b.Output contract- seller wishes to dispose of its full production in one
transaction and the buyer is confident that it can use all the seller can
supply.

c.Requirement
Contract- seller is confident it can
satisfy the buyers needs and buyer is unsure of its exact needs and wished to
avoid the risk of ordering a specified quantity which may turn out to be short
or excessive.

d.Thus either contract could be considered illusive because
the buyer could require zero or the seller could produce zero.

RULE:Even when not expressly stated the EXCLUSIVE DEALING
OBLIGATION implies the sellers or buyers to use best efforts and good faith
with a reasonable expectation test:

When a contract measures seller’s output or a buyer’s
requirements:

3.These outputs or
requirements are those that would occur in good faith

4.The quantity tendered
or demanded may not be disproportionate to any estimate stated in the contract,
or if no estimate was stated,

5.The quantity tendered
must be comparable to any normal or otherwise comparable output or requirement

Thus the
party setting the output or requirement is held to a subjective honest standard
AND an objective standard as what would be considered in the commercial
context.

1.Hypo:Buyer
and seller have req. contract for sand.Sand prices unexpectedly hit bottom and thus sand dealer demands 100
more tons than normal.Thus would not be
made in good faith, or be close to normal estimate required and thus not valid
or in good faith because it takes advantage of the price decrease.The seller would thus be entitled to charge a
higher price.

RULE:The
outputs and requirements are limited by a reasonable ceiling but are not
limited by a reasonable floor, AS LONG AS THE DEMAND FOR ZERO OR THE OUTPUT
MADE AT ZERO QUANTITY IS MADE IN GOOD FAITH.

2.Hypo:Buyer
demands zero gallons when he normally demands 1 million gallions.UCC does not provide a floor, only a ceiling
and ok as long as made in good faith.

3.Hypo:Baker stops making bread crumbs (stops
outputting) because the company is experiencing profit loss. Thus their output
goes to zero. Not ok and breach of their implied promise to use best efforts
under UCCà

RULE:Factors such as profit loss not enough to constitute an output of zero
and shut down before end of contract.This is not enough.

R.PERSONAL SATASFACTION CLAUSE RULE:A personal
satisfaction clause does not render a promise illusory because the promisee is
under a good faith obligation to carry out the condition.

S.Restatement 228-
Satasfaction of the obligor as a condition

1.When it is a condition
of an obligor’s duty that he be satisfied with respect to the obligee’s
performance or with respect to something else, and it is practical to determine
whether a reasonable person in the position of the obligor would be satisfied.

2.Again,
here the implied promise to carry out the condition is the consideration needed.

Hypo:A buyer who had signed a contract to buy a
piece of property did not have to ultimately purchase the property if he found
the report to be unsatisfactory.The
sellers said this made the contract illusory and thus rescinded the offer on
the basis the contract had no consideration.However, the court ruled the personal satisfaction clause is subject to
the promisor’s good faith.The promisor
is entitled to rescind the offer to buy, however, it must be based upon his
good faith dissatisfaction with the report given.THUS the standard used is an objective
standard of a reasonable person to be satisfied or dissatisfied with the report

Rule:When
adhering to a condition based upon the promisors satisfaction, there is an
inescapable duty to exercise the discretion honestly and in good faith

OBJECTIVE
REASONABLE STANDARD:When determining if the promisor
has exercised his good faith the standard
of satisfaction will be that of a reasonable person.Thus if the reasonable buyer would be satisfied with the land = the
buyer must take the land. UNLESS: The
subject is subjective such as a painting, then you go merely on good faith.

III.Restitution- PROMISE NOT MADE

**** What is the difference between
this casue of action where there is no promise and §86****

Is there a difference?

Does a contract implied in law also
require that the person whom the benefit was given make a promise for the cause
of action to even exist?

If the person
receiving the benefit does not ever promise to repay the benefactor will there
still be a cause of action where there is unjust enrichment?***

A.Restitution-
Designed to prevent unjust enrichment

B.This
is not restitution the remedy, it is the cause of action to restore
something suffering from unjust enrichment of another by the actors benefit
conferred.

1.Quasi
Contract (contract implied on law)- an obligation imposed by law for the
purpose of bringing about justice and equity

2.A
promise is never made nor is it implied in fact

3.This
is a non- contractual obligation treated as if it were a contract.

C.RULE:One who, without intent to act
gratitutiously, conferes a benefit upon another is entitled to restitution if:

1.He
affords the other to decline the opportunity or has reasonable excuse for
failing to do so. (life or death situation)

2.The
actor performs for the other a duty imposed upon him by law if the other
refuses to receive the benefit

D.Contract
implied in law (quasi) v. Contract implied in fact

1.RULE:
Contract implied in law-

a.Defendant
received a benefit

b.There
is appreciation or knowledge by defendant of the benefit

c.The
circumstances would make it unjust for the defendant to retain the benefit
without paying for it

d.Recovery
= defendants gain or the value of the PL’s services

1.Hypo:Man cares for another’s child were the other
had a legal duty to care for the child, and thus owes thje actor for this
benefit although there was never a promise made and the benefit has already
been conferred

2.Contract
implied in fact (not what we are talking about here)

a.The
defendant REQUESTED PL to perform the work

b.PL
expected the PL to compensate him

c.Defendant
knew or should have known the PL expected compensation

d.Recovery
= amount parties intended in contract price

1.Hypo:Bring clothes into dry cleaners and put clothes on counter and leave. It is implied by the facts you will pay
for the clothes to be cleaned

E.Restatement 86 Past
benefit conferred:

1.A promise made
in recognition of a benefit previously received by the promisor from the
promisee is binding to the extent necessary to prevent injustice

2.A promise is NOT binding
if:

a.The promisor conferred
the benefit as a gift or the promisor has not been unjustly enriched

b.The value subsequently promised is disproportionate to the
benefit received

MAKE COPY BLUM CHART PAGE 212 and 231

F.Two
requirements for this type of action

1.Defendant
has been enriched in some way

2.The
enrichment is unjust for the defendant to keep

G.Quasi
Contract has four elements

1.Benefit
is conferred

2.The
benefit must be of value to the defendant

3.The
benefit must be retained by the defendant

4.There
is inequitability of defendant retaining it for free

1.Hypo:$500 bill is blown into the car window and
owner of the $ makes a claim for his money back.Thus would the person who found the money
blown into her car be able to keep the money?NO

a.Although
there is no contract to return the money, it would be unjust under the
circumstances to return the money

b.Look
at the elements:

i.$50 is a benefit to me

ii.$50 has value to me

iii.I intend to keep it

iv.It would be inequitable to keep the money

H.RULE: When
benefits are conferred knowingly, there is no unjust benefit.There is a presumption that where the receiver of the benefit knows of the
benefit then it is a gift and there can be no compensation.

1.Hypo:Someone
gives you $500 and then realizes it was an overgenerous gift

I.Rule: This
presumption can be overcome in three ways:

1.The
status of the benefactor may overcome the presumption that a benefit is
conferred as a gift.

a.Ex:When a doctor renders medical care we don’t
regard those as gifts, we regard them as services for a fee

b.One
in a professional capacity rendering his professional service.

2.The
extent of the benefit can overcome the presumption the benefit is a gift

a.Arduous,
dangerous, or expensive

b.We
say the benefactor has gone so far we would imply to compensate him for going
to such an extent by accepting

3.Put yourself in the shoes of the benefactor, if asked
by the benefactor before rendering the benefit would the promisee have accepted
the benefit in return for compensation?

a.Ex:one comes in an emergency and saves your
house because power lines threatened to fall on it and burn it.He then asks for 1,000. (His cost to save
your house) The event was likely.

i.Here every element of a quasi contract is in place (the
four elements) except to determine is there is unjust not to pay.

ii.The amount of damage is always restitution.

J.RULE:Remedy is always the value of the benefit
conferred (restitution)

K.Restitution as
a cause of action when a benefit conferred pursuant to an invalid or
unenforceable contract

1.Hypo:Seller and buyer of a house enter into an
oral agreement to buy a house and buyer gives seller $5,000 down payment.Under statute of frauds, a sale of real
property must be in writing and therefore the contract is unenforceable and the
seller can rescind.If he does the buyer
will have a cause of action for unjust enrichment to get back the $5,000 down
payment.

L.RULE:If the party whom upon which the benefit was
conveyed had no opportunity to decline the benefit there is no restitution cause
of action.

1.Hypo:One paints your house while you are away on
vacation it’s a good job and you appreciate the benefit, but you would have
declined the benefit if it had been offered.The person who gave the benefit would likely have no cause of action

2.Hypo:Pool company gets address wrong and in good
faith build a pool in your backyard.You
like the pool and will use the pool, thus you will be required to pay
restitution.

3.BUT
this is unique to the circumstances:If
you willnot use the pool, you have
small children, you would have declined had you been asked, you likely will not
be subject to restitution.

M.RULE:Circumstances require us to determine genuine
good faith of the person whom has received the benefit

1.Most
courts would not require anyone to go through an additional burden where there
exists a question of a gift of unjust enrichment

N.RULE:Unjust enrichment will occur when one takes over and
performs a legal duty for another

1.Hypo:Good Samaritan took in man’s son and cared
for him until he died.Had the son been
under 18 and the father had been legally responsible for the son, the father
would be liable to the Good Samaritan for unjust enrichment.

O.Restatement
86 (revisited):Promise for a benefit
received from prior contract.

1.A
promise made in recognition of a benefit peviously received by the promisor
from the promisee (the promisee has conferred the benefit)

1.THERE
MUST BE A PROMISE

2.THERE
MUST BE UNJUST ENRICHMENT

a.Hypo:Relative made payments for family on land and
the family promised to pay him back

RULE:There is consideration when a new promise
revives an earlier deal, which had good consideration

UNDER §86
1.There must be a promise to repay the
benefactor

2.There
must be unjust enrichment

3.The
benefit cannot be a gift

4.The
promise to repay must refer to the benefit

5.“A
promise is not binding if the promise’s value is disproportionatly too high
compared to the benefit (but it does not matter if it is too low)”

P.Restatement 82 : Promise to pay Indebtedness:supporting a new promise to pay old
debts.(Although there is no
consideration, such a promise will be enforced when)

1.A promise to pay all or
part of an antecedent contractual or quasi- contractual indebtedness owed by
the promisor in binding if the indebtedness is still enforceable or would be
except for the effect for the statute of limitations.

2.The following facts
operate as such a promise unless other facts indicate a different intention:

a.A voluntary
acknowledgement to the obligee, admitting the present existence of the
antecedent indebtedness

b.A voluntary transfer of
money, a negotiable instrument, or other thing by the obligor to the obligee,
made as interest on or part payment of or collateral security for the
antecedent indebtedness; or

c.A statement to the
obligee that the statute will not be used as a defense.

1.Hypo:14 year
old enters into contract for sale of tractor which is unenforceable, but when
he is 19 he comes back and promises to pay.This is enforceable

2.Hypo:The
period a statute requiring you to pay ends, but you come after that period and
promise to payà enforceable

3.Hypo:Bankruptcy- you have a contract to pay for the tractor, but you then
declare bankruptcy.You later then
promise to pay. à enforceable

Because the promise refers
back to a contract that had valid consideration, they are enforceable.

I.Promissory
Estopple

Elements:

Promise
is made

Reasonable
foreseeable the promisee will rely on the promise

Detrimental
Reliance

Injustice

Reasonable
Foreseeability:

From
the perspective of the promisor

An
objective test- what would the reasonable promisor have foreseen?

The
behavior that leads to the detriment must be the kind of behavior the promisor
foresaw.

Hypo:Grandfather
makes a promise to give granddaughter money to buy a red car.She buys a blue car in reliance, however
grandfather changes his mind.She claims
she detrimentally relied and now must pay for it.Grandfather says he said he would give her
the money for a red car.This would be
reasonably foreseeable because it is an objective test.

Detrimental
Reliance

Must
have been foreseeable to the promisor

Injustice

Justice
does not require a remedy.In justice
requires a remedy

Remedy
= expectation damages?????

The
remedy for the breach may be limited as justice requires

The
remedy is the Π’s choice, what ever she can prove.

Rickets v. Scothorn:Grandfather gives granddaughter promissory
note to give her money to make her better off and she quits her job.Estate refuses to pay.There is no consideration here because there
was no condition upon which the granddaughter would get the money.

Allegheny College:Rich person makes promise of donation to
college.She refuses to pay.There is consideration here, however because
she promises to pay after there is a fund named after her.The promise to name a fund after her is thus
implied in the acceptance of the donations.If there was not consideration, however applying restatement 90 to the
case:

Holding: a)promise made; b) the reliance of the school for the donation by the
woman is foreseeable; c)There is
detriment; d)there is injustice

Feinberg v. Phifer:Π was ;ong time employee and the company
offered her a pension plan in consideration for her service to the
company.The pension would be hers when
she retired.They did not give her a
date to retire and she was still subject to being fired.She retires, and begins to get the monthly
pension but president dies.The son says
the pension was a gift and is not enforceable because there is no
consideration.She gets cancer and needs
the $.

Consideration?Not
for all years of valuable service because todays promise cannot be prompted for
past services; Not for her retirement because they didn’t say she ha to leave
or give her a retirement date, thus no consideration.

However, the ∆ argued she did not rely on the promise,
and she would have quit her job anyway because she got sick.

Goruse v. Group Help:∆ offered Π job but recanted.Π in reliance upon the job quit his
present job and turned down another job offer, he was still having trouble
finding employment.The contract was
employment at will and thus because the Π had the option to take the job
or not take the job it was an illusory promise.Because it is illusory there is no consideration.Thus in light of the fact it was an illusory
promise of employment, the ∆ must at least make the good faith for the
Π to have the opportunity to work there (even though there was no
consideration)The reason the ∆
goes after promissory estopple instead of the illusory remedy is because the
latter would require the Π show what he would have made if he actually had
and retained the job.It is easier to
show what he lost (his reliance damage is easier to show than his expectation
damage)

Cohen v. Cowles:∆ printed a news story about Π
although the had promised not to use his name.Really there was consideration here.The Π gave data in return for the promise not to disclose his
name.Promissory estopple works here
too.A)promise. B)Reliance was
foreseeable; C)Reliance occurred; D)Unjustice occurred because the name was
known.

Is there a deal?Manifestation of
mutual assent

Manifestation
of mutual assent- if there is an offer and acceptance, we have
manifestation of mutual assent

The
objective test of mutual assent:Although the party may say hey had no intention to make a promise, we
look at the reasonable test to whether a promise would have been construed as
such.

Look
at the entire context of the conversation

What
would the reasonable person listening in have thought?

The
objective test:

Have
the parties assented to the bargain (offer and acceptance)

What
were the parties intentions in the process?

Embry v. Hardigane McKittrick:Employer says, “go ahead, your alright, get
your men and don’t let that worry you.” Employee takes this to mean his
contract is renewed, because the conversation prior to the employers quote
centered around that subject.Employer
says that was not the meaning of his words.

Holding:we
don’t care about the bosses secret intentions, just what was outwardly
manifested.We must look to the
circumstances to see what the reasonable employee would have thought the boss
to mean.

Restatement
§21:Intention to be legally bound

The
parties real or apparent intention that a contract is legally binding is
unnecessary, however if a manifestation of intention that a contract shall not
affect legal relations, then the contract may not be formed.

This
give the objective test above a subjective element because now, the Π
cannot KNOW this is really a joke, really not to be legally binding.However, this knowledge is still based on if
a reasonable person would have this knowledge.

The
question is:Would a reasonable person
think the promisor to be making a true promise, AND would a reasonable person
thing there was truly a manifestation of mutual assent, AND would a reasonable
person think there was intention for the contract NOT to be legally binding?

**
The manifestation that the contract is legal need not occur, BUT the
manifestation the contract is not legal must be mutually manifested.

Lucy v. Zimmer:Friends at a bar made a land deal in which the ∆ says was a joke
and the Π says was real.Under the
circumstances, was there a contract?There was a formal written title (on a napkin), however you must only
have the indication that a serious commitment is being made.Thus, did the circumstances allow a
reasonable person to believe there was a contract?

Cohen v. Crowles:The court was wrong when they ruled that there was no contract because
there was no manifestation between the partie to make a legally binding
promise.This is unnecessary.This manifestation is not needed.The only thing needed is the seriousness of
the agreement as determined by reasonable standard.

Offer

Restatement
§24 defines offer:An offer is a
manifestation of willingness to enter into a bargain so made as to justify
another person in understanding that his assent to that bargain is invited and
will conclude it.

Was
there a manifestation of commitment?The offeree must know that he now has the power to seal the deal.

Look
to the parties manifestations:what they
did, said, write, not what they “thought”

Restatement
§26: Signals that the proposed deal was not an offer:if the offeree knows or has reason to know
the offeror does not intent to conclude a bargain until he has made a further
manifestation of assent.

Rule
of Law:For an offer to exist, the
offeree must have the power to close the deal.

Advertisements:general rule is that an advertisement is not
an offer,

Exceptions
exist if the advertisement is specific about how many advertisements are
available, AND is the advertisement is specific about who can accept the offer

Price
terms in AD and offers in general

UCC

Restatement

A communication can be an offer although there is a
missing price term

Price term and description of real estate essential or
there is no manifestation of mutual assent (no offer)

Offer
dies:three ways an offer can die:

Terminated
(we focus on this here)- the offer is terminated if there was nothing said or
done.(Because an offer can be accepted
verbally or by performance)If there is
no express time limit, the courts will impose a reasonable time limit for
acceptance, otherwise the offer dies.

Revoked

Revocation of the
general offer §46:Where an offer is
made by advertisement or in a newspaper or other general notification to the
public, or to a number of persons whose identity is unknown to the offeror; the
offerees power of acceptance is terminated when a notice of terminationis given publicity by advertisement or other
general notification equal to that given to the offer, and no better means of
notification is reasonably available.

Thus, when you use the same forum to revoke
the offer as you used to make the offer, this is OK unless individual
notification is reasonable.

Hypo:If a form
letter is used, there will not be an offer.The response to the form letter will be the offer, EXCEPT,
if the letter has an implied condition such as a first come, first serve
clause, where the first responder thus has the power to close the deal.Other wise, a person sending out a form
letter, has the power to accept a responder (like an advertisement)Missing terms may also indicate this is not
an offer, such a missing price.The
sender of the letter (or ad) thus still has the power to accept an offer to buy
at a particular price.

Hypo:We are also
looking to the objective manifestations of the offeror and the offeree.Thus if the offeree knows he has received a
from letter and that others have received one as well, there cannot be a valid
binding offer.

Donovan v. RRL:Ad for a car where the price was a mistake.

General Rule:Ad’s are not treated as offers unless certain exceptions exist because
an ad does not specify amount, quantity etc.Thus if 10,000 people accepted an offer and there was not enough to go
around the offeror would be liable to all those who had “accepted” but not
received.(this is also why the
exception exists for the implied condition of first come first serve)

We thus make the buyer responding to the as the offeror.

In this case, however, the ad contained certain clauses and
exceptions that made the ad an offer.The ad contained price, time limit the offer would expire, and there was
a statute considering the ad an offer.

Rule of Law:Offer Test:

1)Did
the advertiser in clear and positive terms promise ot render a performance in
exchange for something requested by the advertiser?

2)Could
the recipient of the advertisement reasonably have concluded that by acting in
accordance with the request a contract would have been formed?

Rule of Law:You can only accept an offer being made to you.

Lefkowitz:Man
comes into shop wanting to buy the bargained furs advertised.The shop said the advertisement was not
intended for men, and refused his acceptance.(the man had previous knowledge that the ad was only for women.Thus his knowledge that the ad is not being
made to him = no offer.

Hypo:Statute of
Liberty Coins:US minted coins were
advertised, but ran out and were sued by those sending in an order (accepting).

The quantity is not listed.You must have quantity listed in the
advertisement. No quantity = no offer.Another law besides contract law govern this such as the The Texas Deceptive
Trade Practices Act.Not contract law.

LaSalle National Bank v.
Vega:There was no deal because the
∆ did not have thepower to close the deal, thus his signature was not an
acceptance.It was really an offer
because the bank had the last say and still had to sign.Mel, therefore would also have the power to
change paragraphs in the deal because he is the offeror.The offeror is master if his offer.

Auction
UCC 2-328:

Sale
is complete when auctioneer announces by fall of hammer, or in other customary
manner

Where
a bid is made during the fall of the hammer in acceptance of a prior bid, the
auctioneer may in his discretion re-open the bidding or declare the goods sold

Auction
with reserve- the auctioneer may withdraw the goods at any time prior to
declaring completion of a sale

Auction
without reserve- after the auctioneer calls for bidding to begin, the
article or lot cannot be withdrawn unless no bid is made within a reasonable
time.(The bidder becomes the acceptor)

An
auction is considered with reserve unless the auction explicitly puts up the
items without reserve.

Bidder
may retract his bid in either an auction with reserve or without reserve
until the completion of a sale.However,
a bidders retraction does not revive any previous bid

Acceptance

When
an offer has been made the offeree has the power to:

Create
a contract

Reject
the offer

Make
a counteroffer

Once
the offeree has accepted in the appropriate ways, the parties are locked into a
binding contract.

Offer
can be made expressly, implicitly, or by performance

Agents:An agent has the same ability to accept as
the offeree does.The agent is the
offeree

General
Rule:there is no contract unless
the acceptance is communicated to the offeror.But be careful with the rule because

Restatement Acceptance

The
offeror has the power to state the terms upon which acceptance must be made

Restatement §56- Acceptance by promise:Except as stated in §69 or where the offeror
manifests a contrary intention, it is essential to an acceptance by promise
either that the offeree exercise reasonable diligence to notify the offeror of
acceptance or that the offeror receive the acceptance seasonably.

(When
acceptance by silence okay:§69- Where an offeree fails to reply to an offer, his silence and
inaction operate as an acceptance in the following cases only:

Where the offeree takes the benefit of services
and has the opportunity to reject them, and has reason to know they were
offered with expectation of compensation

Where because of previous dealings it would be reasonable the
offeree notify the offeror he does not intend to accept

An offeree’s conduct and action that is inconsistent with the
offeror’s ownership of property that has been offered, will thus be bound in
accordance with the offered terms unless they are manifestly unreasonable.)

Restatement§56
clearly:So long as either the
offeror makes reasonable efforts to accept (mail), or the offeree communicates
acceptance to the offeror, a contract is made

Acceptance by performance: Restatement §53:

An offer can be
accepted by the rendering of performance only if the offer invites such an
acceptance.This inviting can be
expressed or implied.

Except as stated in §69, the rendering of a performance does
not constitute an acceptance if within a reasonable time the offeree exercises
reasonable diligence to notify the offeror of non- acceptance

Where an offer of a promise invites acceptance by performance
and does not invite a promissory acceptance, the rendering of the invited
performance does not constitute an acceptance if before the offeror performs
his promise the offeree manifests his intention not to accept.

Acceptance
by performance only ok if stated in contract

Once
work or performance has commenced, there is a binding contract and the offeror
cannot revoke.

Restatement§ 54- Acceptance by performance and necessity of
notification to the offeror:

When an offer invites an afferee to accept by performance, no
notification of such performance is necessary unless the offer expressly says
so

However, if the offeror has no means to learn of the
performance there is no contract unless:

The offeree exercises reasonable diligence to notify the
offeror of acceptance, or

The offeror learns of the performance within a reasonable
time, or

The offeror indicated that notification of acceptance is not
required.This last element can
be express indication of implicit.The
test is what would the reasonable offeree think?

Hypo:In the case of Carbolic
Smokeball (below) where there was a guarantee in an ad, the notification of
acceptance could reasonably be thought of as waived, even though the company
would have no means to learn of a consumer’s performance.Although the ad did not expressly waive
notification of acceptance by performance, the ad implicitly waived
notification by a standard of what a reasonable offeree would think.

T.

§32 Invitation of performance or promise- Incase there is doubt, an offer invites acceptance by
promise or performance

Exception:
even if the contract does not
expressly say that acceptance can occur by performance, once the offeror knows
of the performance about to commence and it does, he cannot revoke

Ambiguous
acceptance:The acceptance must be a
reasonable affirmative acceptance form the view of the objective reasonable
person

Restatement §62- when the offeree has begun performance as
acceptance this is treated as a promise to complete performance and a valid
contract is created.

Hypo:Men come to
work on your house in which a form sent by them was filled out by the
homeowners and sent back. The homeowners
then become the offerors and the builders the offeree.Say there is no clause about performance
being satisfactory as acceptance.The
offeror cannot revoke the offer once performance has begun, because it was
reasonable the offeror would learn of the acceptance within a reasonable
time.

Hypo:If however, the
homeowner had called while the builders were on their way to the house, this
would be a proper revocation of an offer because the offeror’s had not yet
learned of the acceptance by performance.As long as the offeror does not know of acceptance, they can revoke.

Hypo:say the
builders send someone out, and this performance is not acceptance, but deciding
whether to accept or reject the offer to build.However, say that inspector begins tearing shingles off the roof.A reasonable offeror would view this as an
acceptance of the offer and a binding contract would thus form.

UCC Acceptance

U.

§2-206:
Conforming goods: if an offer does not express that the acceptance must be
made by promise, then a shipment of goods will be good acceptance and contract and
the shipment can be conforming or non- conforming goods

Requirement
of Seasonable Notification of non- conforming goods:There will be liability however, unless there
is a seasonable notification that the non- conforming goods are only meant as
an accommodation to the buyer.Thus non-
conforming goods are still an acceptance of an offer (usually an order) because
this is performance.There catch is that
the offeree must make a seasonable notification that the goods are non-
conforming.If no notification then
there is a breach.

Seasonable:this term is industry specific and depends on
what would be a time in which such a notification would benefit the offeror or
would be “too late” to prevent any harm.

*
There must still be a reasonable acceptance.For example, if the buyer ordered a drug and was sent an air conditioner
this would not be acceptance.

§2-206:Unless otherwise indicated by language or
circumstances,

An
offer to make a contract shall be construed as inviting acceptance in any
manner and by any medium reasonable under the circumstances;

An
order to buy goods for prompt or current shipment shall be construed as
inviting acceptance either by prompt promise to ship, or by shipment of
conforming or non- conforming goods, but such a shipment of non-
conforming goods does not constitute an acceptance if the seller
seasonably notifies the buyer that the shipment is offered only as an
accommodation to the buyer.

Where
the beginning of a requested performance is a reasonable mode of
acceptance an offeror who is not notified of acceptance within a
reasonable time may treat the offer as having lapsed before acceptance.

A
definite and seasonable expression of acceptance in a record operates as
an acceptance even if it contains terms additional to or different from
the offer.

Hypo:Buyer has a
purchase order to buy a drug, however they know the drugs price is about to
rise and the buyer orders 6,000 vials of the drug at the low price.The seller refuses to fill the order in
total, but sends a partial shipment along with a counteroffer for the rest of
the order at a valid price.The seller
also says “seasonably” that the shipment is only an accommodation.The buyer argues that performance was an
acceptance if the offer at the lower price, but because the company sent the
shipment only as an accommodation, this is considered full performance of non-
conforming goods, and the rest of the order will be treated as a separate offer-
acceptance goverened by the counteroffer of the seller for the higher price.

Q.Restatement

Restatement §60- Acceptance if offer which states time,
place, or manner of acceptance:

If an offer prescribes the time, place, or manner of
acceptance its terms in thos respect must be complied with in order to create a
contract.

If an offer merely suggests a permitted place, time or manner
of acceptance, another manner of acceptance is not precluded

Hypo:Ford gives an
expressed manner of acceptance, for example a signed form.Say however, shows up to perform. This could
not be acceptance because the manner of acceptance has been expresses.However, Allied’s conduct would be considered
a counter- offer (changing the terms of acceptance) and Ford’s allowing Allied
to begin work then becomes acceptance.

Carlill v. Carbolic Smokeball:Have a company advertisement for a
medical deviceand they propose a guarentee.If anyone bought the smoke ball and then got the flu, the person would
get a reward.The offer was the
advertisement.The offer was made to
anyone willing to adhere to the conditions set forth in the advertisement.Acceptance of the offer was to smoke the
ball, following the directions, however was getting the flu part of acceotance
since it was a required condition of the offer?No because an offer cannot impose a methodology of acceptance that if
not an AFFIRMATIVE response by them.The
method of acceptance cannot be something we do as normal behavior (like
breathing) or something not even calculated as an affirmative response.Thus in this case, getting the flu could not
be an affirmative acceptance and thus no contract.

R.Offer
of Reward

It
is impossible of an offeree to accept an offer unless he knows of the offer’s
existence at the time of performance.

Hypo:Woman gavepolice info that led to an arrest, however
when giving the information she was not aware that there was a reward.Thus, there was no acceptance of the offer of
a reward because she didn’t know about it.

Exception:

Restatement
§51:Effect of part performance
without knowledge of the offer:Unless
the offeror manifests a contrary intention, an offeree who learns of an offer
after he has rendered part of the performance requested by the offer may accept
by completing the requested performance.

Acceptance Part II (when effective)

Restatement’s
notification of non- acceptance §53:

An offer can be
accepted by the rendering of performance only if the offer invites such an
acceptance.This inviting can be
expressed or implied.

Except as stated in §69, the rendering of a performance does
not constitute an acceptance if within a reasonable time the offeree
exercises reasonable diligence to notify the offeror of non- acceptance

Where an offer of a promise invites acceptance by performance
and does not invite a promissory acceptance, the rendering of the invited
performance does not constitute an acceptance if before the offeror performs
his promise the offeree manifests his intention not to accept.

Restatement §53

UCC 2-206

#2:It can look like someone has accepted but
there exists a very short oeriod of time where you have an opportunity to
correct a false signal of acceptance, and use this time period of non-
acceptance.

This rule is only valid for
acceptance by performance and will not work if acceptance has been made by
promise.

Where the seller sends non-
conforming goods and has a time period that is “seasonable” to notify the
buyer the goods are not an acceptance but an accommodation.

Mailbox Rule

Restatement §63 Unless the offer provides otherwise:

An acceptance made in a manner and by a medium invited by an
offer is operative and completes the manifestation of mutual assent as soon as
put out of the offerees possession, without regard to whether it ever reaches
the offeror; BUT

An acceptance under an option contract is not operative until
received by the offeror.

When
the acceptance is dispatched, the offer is accepted

The
acceptance must be properly dispatched, three ways and conditions for each way:

If
an invited means, the acceptance is effective upon dispatchà
This is an express or implicit response, what would be thought reasonable by
the objective reasonable offeree.

If
an unvited means, the acceptance is effective upon receiptà
This is an unreasonable and unreliable means (carrier pidgeon)

If
a prohibited means, there is never acceptanceà thus is a contract
expressly gives only certain means of acceptance, any other means is
prohibited.

Offer
Revocation is effective upon receipt

Exception
to mailbox when revocation of an offer is sent:§40:

When
revocation of an offer is sent, and an acceptance has been dispatched, the
acceptance is only effective if it overtakes the revocation.Thus the acceptance must be received by the
offeror before the revocation is received by the offeree.Basically, if a revocation is sent before an
acceptance is received, then which ever arrives first wins.

Not
withstanding the exception, acceptance effective upon dispatch, everything else
upon receipt.

Mixed Signals

If
the offeree sends a rejection to the offeror, changes his mind and sends an
acceptance, the rule is which ever arrives first wins and is valid.(Thus you could send a normal rejection but
express mail an acceptance)

If
the acceptance does not neat the rejection but arrives after the oferor
receives the rejection, that acceptance becomes a counter- offer for the
original offeror to accept.

Estopple
in this mixed signal situation:

Where
the waters are muddied by rejection and accepting and the offeror wishes to
rescind the contract, the offeree can be estopped from enforcing the contract
where the offeror has relied to his detriment upon the back and forth
rejections and acceptance.

Restatement

Acceptance by silence

Restatement
§69

When
acceptance by silence okay:§69- Where an offeree fails to reply to an offer, his silence and
inaction operate as an acceptance in the following cases only:

Where the offeree takes the benefit of services
and has the opportunity to reject them, and has reason to know they were
offered with expectation of compensation

Where because of previous dealings it would be reasonable the
offeree notify the offeror he does not intend to accept

An offeree’s conduct and action that is inconsistent with the
offeror’s ownership of property that has been offered, will thus be bound in
accordance with the offered terms unless they are manifestly unreasonable.

Basically,
if the reasonable offeror can conclude there has been an acceptance there is
one

Most
of the time a certain behavior along with silence must be one of action and not
inaction

If
one exercises dominion over something, the have bought it.

Exercising
dominion over something is inconsistent with the owners possession.

Russell v. Texas:Landowner gave oil company an offer to renew an easement which they did
not respond to but continued use of the easement.The contract also expressly stated that
acceptance could be performed by continued drilling.Because this was a renewal there is a more
troublesome problem.It would be an
obvious acceptance if the company had never before used the easement and then
suddenly began to use it, but here how do we know that this is really
acceptance by peformance or simply ignoring the offer?It does not matter.Remember all that matters, is what is
outwardly manifested not what intentions of the parties are.The continued drilling was not
ambiguous,and was a particular behavior
signaling acceptance.

Hypo: Distinguish
this from unjust enrichment and restitution:You may be obligated if a pool company
installs a pool in your yard (when you didn’t ask for it) but you still use
it.Thus you may have to pay because
your manifestations show you accept.If,
on the other hand you didn’t use and you had a small child who could not swim,
there would obviously be no acceptance.There is an acceptance when the offeree exercises dominion over things
which are offered without expressly or impliedly agreeing to the offer.

Hypo:Someone comes
to paint your house and you sit silently on your proch sipping lemonade, they
pull up in a truck with paint and begin painting.Even though you have said nothing, and have
neither accepted or expressly rejected, your presence gives you an opportunity
to reject.Your silence is a promise to
pay.

Hypo:Distinguish the
prior hypo to if you are not at home and do not have the opportunity to reject
the “offer”.If the paint had been
purple and you hate it, then under the theory of unjust enrichment principles
there may not be a contract at all.(because
you have not been enriched)

Hypo:You go to
K-Mart and are eating a candy bar.You
have bought it by action because you exercised dominion.This is inconsistent with the K-Marts
ownership and possession.

**Hypo and §69 rules: You are on the loading dock at company
there are cars.The dock never ordered
the cars, but you needed then for business.You don’t know why they are there but you are glad to use them.Under §69 you have thus exercised dominion
and control over them, accepted the property and are bound to pay.Finally the owner of the cars asks for them
back, apologizing.You say no, you are
using them.The owner then tells you the
price which is way out of line for what a car would normally cost.

1)If
the owner demands the market price this is manifestly reasonable and you owe
that price.

2)If
the owner demands a price higher than mkt. price, but not unreasonable, you owe
that price.

3)If
the owner demands a price manifestly unreasonable, you owe for the unjust
enrichment, you owe the price of your benefit.

4)However,
this is also a tort and §69 says that the owner may only pursue one cause of
action.Thus if he goes for the tort, no
contract.

Hypo:A and Ozzie
come onto B’s ranch and kill all of B’s cows.A has exercised dominion over B’s property.§69 says you have committed a tort AND you
have created a contract by having to pay.A reason to pursue the tort would be to recover punitive damages, which
are not available under contract law.

Hypo:Open mailbox
with candle inside sent to you by sisters of the poor.You light the candle.The3y have asked for $25 or their candle
back.Under §69 you have exercised dominion
and control.

Ammons v. Williams:Π books 6,000 lbs of shortening, makes the offer, and the
offeree-supplier does nothing.In this
case the silence will be treated as an acceptance because the buyer relied on
the sellers previous pattern of acceptance and in the meantime relied on acceptance
and forwent to buy from anywhere else.This is a case of previous dealings.

Smith v. Scarff:“The case where the people are left holding the bag”Buyer always buys its bags from seller who
has buyers logo on the bags.Due to previous
dealings the manufacturer always keeps a stock of bags to be able to fill the
order in a timely fashion.The buyer
changes names however, and does not want the bags.They say they did not ask the company to
print the extra bags and did not promise to pay for the extra bags.The seller says there was an implied promise
based on past dealings.When there is
not a clear cut deal, look to previous relationship to determine the implied
promises.

S.UCC

UCC
and the Ammons example 2-204:the offer
can be accepted by prompt shipment of conforming goods, or prompt promise to
ship goods.However this is not the case
in Ammons.Suppose the buyer offered to
buy 942 cases of shortening, but the seller responds that he can only ship 800
cases.This is thus a counteroffer.Supose the buyer initially says no to this
counteroffer, but the seller ships the 800 cases anyway.The buyer then accepts them without
objection.2-204 (2) states:

An agreement sufficient to constitute a contract for sale
may be found even though the moment of its making is undertermined.Thus the buyers non- objection would make a
contract at least for the 800 cases.

Now
suppose that the seller of the 942 cases never ships nor promises to ship.Would his failure to reject within a
reasonable time considered an acceptance?The answer depends on whether the seler has agreed to the buyers
proposed bargain and this turns on how one uses the prior course of dealings
between the parties

Restatement §69

UCC §

Silence OK when:

Offeree takes benefit (dominion and control) and has
reasonable opportunity to reject, and has reason to know compensation
expected

The offeror stated silence OK

Previous dealings make it reasonable that silence = accept
and intention not to accept = must notify

Must be ratified by him (chooses K over tort)

Enjoyment of svcs.

Past behavior

Exercise dominion over property

Unless terms are unreasonable (then still owe what your
benefit was)

Contract for sale of goods may be
made in any manner sufficient to show agreement including conduct by BOTH
parties which recognized the existence of such a contract.(past dealings)

Ex:Scharff paper stored bags for buyer.They did this for 36 years which shows an
implied contract,

*here, you do not need to know
the moment of of making the K.

UCC????

If you have
accepted by silence you have 10 days to reject the offer or a reasonable time
according to the industry

Counteroffer

T.Restatement

Restatement §38 Rejection

An offerees power of acceptance is terminated by his rejection
of the offer, unless the offeror has manifested a contrary intention

A manifestation not to accept and offer (to reject it) is a
rejection UNLESS the offeree manifests an intention to take it under
advisement.

That
you are taking the offer under advisement and not rejecting it must be
outwardly manifested

Must
distinguish between a request for different terms and a demand for different
terms.

If
the “acceptance” merely requests alternative, different, or additional terms,
but still accepts even if those terms are rejected there is still an acceptance
and the additional terms become offers of their own to be accepted or rejected
(§ 61) BUT

If
the “acceptance”is conditioned upon the
addition of the new terms, this is a rejection of the offer and becomes a
counteroffer.

When
there is a counteroffer, the original offer dies.

Restatement §61:Acceptance which requests change of terms:

An acceptance which requests a change of terms of the offer
does not invalidate the offer unless the acceptance must acceot the new
terms.

Hypo:Buyer inquires
about commodity for price quotations.Seller gives particular price at particular quantity which is an
offer.(involving specific quantity
between 2000 and 5000 tons) and price at $54 per gross tons.The buyer, however orders less than what was
offered in the range, only 1200 tons.The seller can refuse because it has become a counter offer and not an
acceptance because the quantity is different.The buyer then turns around and accepts the original offer at the
original price.The court rules this
original offer is gone, dead and killed by the counter offer.Thus there is nothing for the buyer to
accept.

Hypo:What if in the
prior hypo the buyer had demanded the quantity of 1200 instead of the 2000-3000
tons (which is a counteroffer) and the seller replies that they will not sell
at that price.The buyer immediately
replies they will take the original offer.This would probably be considered a second offer by the seller (a
counteroffer to the buyers counteroffer) because the seller manifested an
intention to continue bargaining.

Restatement §39 Counteroffer

A counteroffer is an offer made by an offeree to his offeror
relating to the same matter as the original offer and proposing a substituted
bargain differing from that proposed by the original offer

An offerees power of acceptance is terminated by his making
of a counteroffer unless the offeror has manifested a contrary intention or
unless the counteroffer manifests a contrary intention of the offeree.

Thus
there are two possible scenarios:

It
can be a counteroffer if related and viod the original offer

I
can be a separate offer unrelated and the original offer still stands

Hypo:Seller offers
steel rails for $5,000.Buyer wants
steel rails and iron rails.Seller says
they don’t have iron rails, and the buyer proposes a 3% finders fee for any
iron rails they can find.Seller rejects
this proposal to find the rails for the buyer.Buyer then says okay, he will take the original offer.Was the intervening proposal an effective
counteroffer and thus a rejection of the original offer?NO.It
was a completely separate offer, and the original offer still stands.

U.UCC 2-207

Example
leading up to 2-207:

A buys lumber
and B sells the lumber.The fact we do
not sit down at a table and hammer out the details of a contract is
standard.We have form contracts.Each parties form is tailored to protect that
party’s interests.Assume A starts the
ball rolling with a purchase order.(offer) Seller receives the purchase order- offer and sends the standard
acceptance agreement form letter.

Now suppose the
buyer, A, wants out of the deal.A uses
the fact the buyers acceptance had different terms in his standard acceptance
form than the terms in her standard purchase order form.A says B’s acceptance is really a counter
offer.

Or, say the
seller, B, wants out of the deal, uses the differing terms in the form letters
and says his letter was really a counteroffer, he had rejected the original
offer, and A had never accepted.

But say the
lumber was actually shipped and we thus had a contract based upon performance
and acceptance.(The offeror/ offeree is
no longer important because there is a deal based on manifested behavior)

The shipped
lumber, however, has wood rot.A’s terms
in her purchase order make the buyer responsible for such a circumstance.B’s acceotance form, however, disclaims
liability for wood rot.

The rule is the
last offer made (out of all the offers and counter offers) wins.Thus the buyer would be the ultimate offeree
because they acceoted the offerors counteroffer with dfferent terms by
accepting the shipment.Basically the
last document sent dictates the deal. However, we could potentially have a back
and forth never ending sending of forms.à 2-207 gives us a new
set of rules!

First, we use
restatement rules for offer. We assume here that someone has been made an offer

2-207:Additional Terms in acceptance or
Confirmation

A definite and
seasonable expression of acceptance or a written confirmation which is sent
within a reasonable time operates as an acceptance even though it states terms
different or additional to those offered or agreed upon, unless acceptance is
expressly made conditional on assent to the different or additional terms

The additional terms
are to be construed as proposals for addition to the contract.Between merchants, Such terms become part of
the contract unless:

The offer expressly
limits acceptance to the terms of the offer;

They materially alter
it; or

Notification of
objection to them has already been given or is given within a reasonable time
after notice of them is received.

Conduct by both parties
which recognizes the existence of a contract is sufficient to establish a
contract for sale although the writings of the parties do not otherwise
establish a contract.In such a case,
the terms of the particular contract consist of those particular terms on which
the writings of the parties agree, together with any supplementary terms
incorporated under any other provisions of this act.

2-207(1)- tells us if we have a
contract

If an acceptance is reasonably
construed as such, even if it contains a new term, it will be treated as such.

However, if the “counteroffer”
expressly says that the new terms are essential to the assent, it will be
treated as a counter offer and 2-207(2) does not apply,à

Go to 2-207(3) if performance upon
the counteroffer is acceptance by conduct (shipment and payment for goods)

2-207(2)- Tells us what to do with
the additional terms

First- determine if the buyer AND
seller are merchants.

If no- the additional terms are
just proposals tht must be agreed to.The contract is valid as far as all matching terms, however the
additional terms become “offers” in themselves awaiting acceptance.The other can thus reject the additional
proposals or accept the additional terms.The core contract, however remains valid.

If both parties are merchants, and
the additional “proposals” automatically become part of the contract UNLESS:

The offer expressly says the
additional terms must be accepted

The additional terms materially
alter it; such as price or quantity.(only case where there need not be an expressed objection)

Material altering term Hypo:it is a significant element of the exchange bargained for by the
party.If the term would result in
surprise or hardship to the party, it is material.Surprise can be defined in reference to the
reasonable person in light if common practice and usage.Hardship means the term imposes an unbargained
for burden, or detracts significantly from the reasonable expectations of the
party.

The other party expressly objects
to the terms

Notice that this only includes
additional terms and not additional and different terms as in the first
section. There is a different rule- the
knockout doctrine for different terms.

2-207(3)-
where CONDUCT (and not a writing) is sufficient to establish a contract

In
this case although the writings do not themselves = a K, the writings in
existence will be used and the terms within the writings that agree will be the
basis of the contract.The rest of the
terms will be added by UCC fillers and default.

Thus,
even if a counter- offer occurs because the offeree has expressly said that the
additional terms must be accepted or no contract (2-207(1) caveat), if
performance appears to be an acceptance of that counteroffer such as delivery
and payment of goods, conduct of the parties would thus establish a
contract.According to 2-207(3) the
writings of the parties would form the contract and the additional provisions
(such as a disclaimer) would be thrown out.

Putting
it all together:

We
really don’t care who is the offferor and who is the offeree (unless an express
counter offer is made)

Determine
if the parties are merchants

Find
the additional and different proposals

The
proposals are then either accepted or rejected depending on the status of the
parties, if the terms are material, and if they are expressly objected to, and
the contract already limits its acceptance to the terms stated.

2-207(1) Hypos:

Hypo:2-207(1)
replies that are clearly not an acceptance:Buyer writes to seller offering to buy a gun for $450 COD, delivery in
30 days and requiring acceptance by Friday.Seller sends acceptance the following Monday, this is not seasonable and
it is a rejection or a counteroffer.

Hypo:If the seller
above responded in time, but the response states, “thank you for your order,
unfourtanetly we no longer stock the gun.However, we have a similar gun you can have on the same terms.This response proposes a different sale of
goods than those ordered = no acceptance and a counteroffer.

Hypo:If the seller
above responded on time with, “your order is accepted on the condition that you
agree to indemnify us for any claims of injury arising out of the use of the
goods above”No acceptance because the
acceptance is only good is the new term is accepted.Assent conditional upon the new term.This is also a counteroffer.

2-207(2) Hypos:

Knockout Doctrine

When you have a clear cut offeror and offeree, and the acceptance has
different terms that contradict each other (as opposed to additional terms)

Only for merchants

The terms will knock out each other, and that term will no
longer be apart of the contract.

You then look to the default rule to give you your missing
term

The majority rule is that we then look to the industry
standard to determine the gap filling term.

Only applies when terms contradict each other, not when they
are additional

Hypo:Have a contract
where a buyer sends in a purchase order and a standard agreement is sent back,
however, the purchase order ordered red widgets and the acceptance acceptance
an order for blue widgets.The color
term is knocked out and does not exist.What ever is the industry norm, green widgets becomes our color term in
the contract.

Additional Terms

Restatement

UCC 2-207 and Knockout

Mirror image rule

Demand new term v. suggest the new
term but still accept the deal

2-207

Contract?(performance or form letter)

Only need reasonable acceptance
and cant have demand for additional or different terms (then it’s a counter
offer)

Merchants?

If yesà
additional terms stay unless 3 exceptions

If noà
additional terms gone unless accepted

What are the additional terms?

If both merchants and…

If there was acceptance by
conduct, or acceptance of the counteroffer by conduct, the contract before
the counteroffer made becomes the contract and any additional terms gone.

Terms that contradict gone

Gaps filled with industry norm

Revocation of offer or acceptance

Restatement § 43:Indirect communication of revocation:

An offerees power of acceptance is terminated when the
offeror takes definite action inconsistent with an intention to enter into a
proposed contract and the offeree acquires reliable information to that effect.

The
offer’s retraction need not be expressed or an actual withdraw, as long as the
offeree has information that tells him there is no longer an offer.Thus if the offeree does not know that an
offer has been revoked or of the offerors intention to withdraw, the offeror is
still bound until such an intention is made known to the offeree.

Dickenson v. Dodds:Seller dealing in property and makes an offer to sell to buyer.“this offer to be held over until Friday at
9pm.”(This is not a option contract
because there is no consideration).Buyer goes to his mother in law’s and tells her he is going to accept
the offer.Buyer at this point learns
the seller has sold to someone else.Buyer sends an agent, Berry, to the train station to accept the
offer.He sends the agent so that the
seller cant revoke the offer upon seeing the buyer before the agent has a
chance to accept the offer.Agent
notifies the seller that buyer accepts, but it is already too late.Because the buyer KNEW the seller had sold
the property, there was no longer an offer.Because of the sellers conduct and the buyers knowledge of this conduct
the offer was effectively revoked.

Restatement §46:
Revocation of general offer:When you
use the same forum to revoke an offer as you used to make the offer (newspaper,
advertisement, or to a number of persons whose identity is unknown)revocation in that same forum is OK as long
as it is unreasonable to identify each individual.

Thus,
if an offeror revokes verbally to a group of people, this is OK.

Restatement §41:Lapse
of time as revocation:

An offerees power is acceptance is terminated at the time
specified in the offer, or if no time specified, at the end of a reasonable
time.

Reasonable time = a question of fact depending on all
circumstances

An offer is seasonably accepted if an acceptance is mailed at
any time before midnight on the day which the offer is received.

Lapse
of time rule of thumb:when the object
to be achieved by the offer can no longer be achieved, the offer has
lapsed.

Examples
of lapse of time:

At
5pm

“Upon
acceptance by someone else”

“Upon
apprehension of the suspect”

Revocation by death: Restatement § 48:An offerees power is
acceptance is terminated when the offeree of offeror dies or is deprived of
legal capacity to enter into the proposed contract.

Notice
of knowledge of death is not required

Offer
automatically revoked

If
it is an option K, then death does not revoke the offer

Must
distinguish between an already formed contract and one dying and a mere offer
(without acceptance and one dies)

Offers are
revokeable as long as the offeror beats the acceptance and there is no option
contract.

Option Contract

“You
may exercise the option” = you may accept the offer

An
optioncontract occurs when there is
consideration given to keep the offer open.It is a contract upon an offer for another contract.

Even
in that face of a counteroffer by the offeree, as long as that counteroffer if
made within the option period, the offer is kept open until it lapses due to
said event, said time, or reasonable time if nothing stated.

Hypo:Say the offeree
has two days left in the option period and at that time expressly rejects the
offer.The next day however he changes
his mind and accepts the offer.Technically, the offer is still open.However, be careful in this case because the offeror can claim
estopple in the face of the offeree’s initial rejection if the offeror has
relied on this rejection and offered and created a contract with someone
else.Not considering estopple, however,
his offer is still open.

Hypo:What if the $50
which is the consideration for the option has not yet changed hands, but
promised in the terms of the contract.This is okay and is still an option.

Restatement

How to tell what consideration is for option:

Restatement §87:Option Contract:

An offer is binding as an option contract if it:

Is in writing and signed by the offeror, recited a purported
consideration for the making of the offer, and proposes an exchange on fair
terms within a reasonable time; OR

Is made irrevocable by statute

An offer which the offeror should reasonably expect to induce
action or forbearance of a substantial character on the part of the offeree
before acceptance and which does induce such action or forbearance is binding
as an option contract to the extent necessary to avoid injustice

Thus
option binding if:

Signed
in writing

Signed
by an offeror

Recited
purported consideration

Proposes
fair exchange on fair terms

W/in
a reasonable time

V.UCC

2-205 Firm Offer- sale of goods only!

Offeror
must be a merchant

Offeree
need not be a merchant

Must
be manifested in a signed writing

The
terms promises it will be held open (promises not to revoke)

Option
period=

If
the option states within its terms the perios to keep the option open with a 3
month max.

If
not stated, then a reasonable time with a 3 month max.

If
the offeree drafts the language where by the offer is made to him, then the
offeror must separately sign the option portion (must sign twice)

If you meet all four requirements:

Merchant makes offer

Manifested in signed writing whose terms gives assurance it
will be kept open

Time limited to 3 months

Offeror has separately signed the option portion of the writing
(if the offeree drafted the writing)

Then you have a valid option contract where no
consideration is necessary.

Hypo:The exam likes to give an example, but keep
out the express promise to keep the offer open.Watch for this!!

Unilateral contract and options

Option contract created by part performance or tender:Restatement §45

Where an offer invites an offer to acceot by rendering a
performance and does not invite a promissory acceptance, an option contract is
created when the offeree tenders or begins the invited performance or tenders
the beginning of it.

The offerors duty of performance under any option contract so
created is conditional on completion or tender of the invited performance in
accordance with the terms of the offer.

In
this case acceptance can ONLY be done by performance.“This offer can be accepted only by
performance”

When
the party begins performance, the offer becomes irrevocable.

Paterson v. Pattberg:If you get together a fixed amount of money and bring it to me by a certain
time, then that will satisfy the total debt you owe me.The offeror said if the offeree could come up
with the principle owed on the mortgage by May 31, that would e enough to pay
off the mortgage owed.The offeree comes
to the house and announces his presence and that he is there to pay the
principle.Offeror says he has already
given the mortgage to someone else (revoking the discount)Because revocation occurs before acceptance
there is no contract.In this case
acceptance = payment.This was the only
type of acceptance, the performance of paying the princiuple and thus was a
unilateral contract.However, you could
argue under the rule that the gathering of the $ made the partial performance
irrevocable.

“Partial
performance” is indicated by the detrimental reliance rule:

**Remember
that §45 only creates the option

If
the partial performance is indicated by detrimental relaiance, we have an
option (to accept or reject the offer, but the performer still has the power to
reject the offer)

Bilateral Contract and Option

Where
the offer has been relied on

When
there is an exchange of pledges or at least the option of an exchange of
pledges, we have a bilateral contract

In terms of exam question:When you see a general contractor relying on the sub contractors offer,
that reliance makes the sub contractors offer irrevocable.(bid = offer)The consideration for the sub to keep his
offer open comes when the general contractor makes his offer for the job.

Restatement
§87 (2)

This
is not §90 because it is an offer and not a promise.The difference between an offer and a promise
is that an offer is a conditional promise which only becomes a promise after
someone accepts.BUT

§90
comes in if you say the promise by the subcontractor to keep the offer open was
an implied promise and was relied upon by the general contractor in making his
bid for a job.

Foreseen
by subcontractor

Reliance
by general

Detriment
to general

Unjust

Thus
we can estopp the sub from claiming there is no consideration for his promise
not to revoke the offer.

But
instead of using §90 we use §87(2).They
are the same except §90 gives damages while §87(2) only makes an offer
irrevocable!

If
you make an offer that you reasonably foresee as inviting reliance of a substantial
character then it is an option contract if justice requires it to be so under
§87(2)

Rule:using a sub’s bid in a general’s main bid is
not acceptance.

§87(2)
applies to both bilateral and unilateral while §45 only applies to unilateral

Hypo:A wants B to
attend a certain of AA meetings, and attend them in Dallas for which A will
give B money.Thus before the first
meeting you must get to Dallas.Yu get
on the airplane and go.A revokes the
offer before you begin attending the meeting.A says that you have not begun your performance and thus you cannot bind
him to his offer.Although this is a
unilateral contract (acceptance only available upon completion of attending the
meetings) and §45 does not apply because you have not begun to perform, you can
apply §87(2).Thus

A
could reasonably foresee relance of a substantial character in that you
went to Dallas

Justice
would require the offer be held open upon completion of the meetings.

Electrical v. Maeda: Sub makes the general contractor promise that
if the sub is the lowest bidder, then the general will use him.The general contractor is awarded the job,
but finds someone else to do the job in place of the subcontractor.

Holding:The
general’s promise to stay with the sub if he was the lowest bidder was not
consideration because there was already a pre- existing legal duty by
§87(2).§87(2) already makes the
subcontractors promise not to revoke a duty.Thus, there cannot be consideration for a pre existing legal duty.

§90

§87(2)

§45

2-205

Applies to promises, not offers.

An offer is a conditional promise,
not a “contract” that estopps claiming of no consideration.

Applies to both uni and bilateral

Forbearance or inaction must be of
a substantial character (did not seek any other bids; based main bid on the
sub’s bid)

Writing requirement

Injustice avioded

Applies only to unilateral

Must have partial performance

Has nothing to do with injustice

Performance does not have to be
substantial in any way

Sale of goods

Firm offer

Requirement of writing

No consideration

Offeror = merchant

Signed twice

Terms expressly hold offer open

Indefinite Terms

Restatement §33:Certainty:

Even though a manifestation of intention is intended to be
understood as an offer it cannot be accepted so as to form a contract unless
the terms of the contract are reasonably certain

Terms are reasonably certain if they provide the basis for
determining the existence of a breach, and for giving an appropriate remedy.

The fact that one or more terms are left open or uncertain
may show that a manifestation of intention is not intended to be understood as
an offer or as an acceptance.

First
must ask:Did the parties intent
that in the event of this open term there would be a contract to be negotiated,
or would there not be a contract.When
not dealing with goods, courts will often find parties did not intend a
contract when price is at issue.

Intention
to be bound can be evidenced by partial performance

Parties
that have made their agreement “subject to” have manifested an intent not to be
bound in the event of an unagreed term (see Empro)

Empro v. Ball:Parties were negotiating agreement with a clause that expressly said,
until the terms were agreed upon there was no contract.The ∆ jumps ship and the party who
added the clause actually wants the contract enforced.Court says no, the express term manifests an
intent not to be bound.

Jospeh v, Shumacher:Next years rent in the contract “to be agreed upon”, however the
landlord asks for $300 than the previous year.Court says market price not the only way to determine price.The court would not fashion a contract for
the parties becase this was such a material term.

Unless
a promise is certain to a reasonable certainty, the courts will not know how to
enforce it.Varney v. Ditmars:employee promised a fair share of the
profits if he worked overtime.He did so
up to a point, fell ill, was fired, but came back to fulfill and receive his
fair share of the profits.What was
“fair share”?The court could use unjust
enrichment (restitution) to solve this problem.Thus although the term is hopelessly vague, could use unjust enrichment
to solve the problem.

Why
would one leave a K vague?

Might
not have enough info at then time

Problem
might not ever come up

Ignorance-
we didn’t ever think about it

B/c
it may break the deal

There
is always an implied promise to negotiate the missing erm in good faith, this
is why courts still enforce the contract

UCC 2-204

Even if one or more terms in a K for sale are left open it
does not fail for indefinitness if the parties have intended to make a contract
and there is a reasonably certain basis for giving an appropriate remedy.

UCC GAP FILLERS:

Price = the reasonable price at the time of delivery

Quantity = if no prior course of dealing = no contract

All goods are to be delivered at one time, not in several
lots

The buyer has the option of selection the assortment of
goods, the seller has the option of determining the specifications relating to
shipment

The seller has a reasonable time to make delivery.Any act whose time of not specified is a
reasonable time

Place of delivery for a non – commercial sale and for the
commercial sale where no place of delivery was agreed upon is determined by the
following rules:

If the contract is for the sale of identified goods, and the
parties know the location of those goods, that location is the place if
delivery

If rule 1 is not applicable, the seller’s place of business
or his residence is the place of delievery.

This rule is not applicable if the deal can be interoreted
as requiring or authorizing the seller to ship to the buyer.

If the agreement authorizes the seller to send the goods to
the buyer, the seller could use documents of title and ship under reservation

Payment of price is due upon receipt of goods, subject to
buyers right to inspect the goods.

Three
things the courts look for to determine an indefinite term:

Dealings
under the contract:parties that had
dealings under the contract before where a particular pattern has been
manifested and will tell the court about why the terms are the way they are.

Dealing
from prior contract:Parties have
not begun to perform under the contract yet, but they have dealt with each
other before and the missing term was X.

Usage
of trade:what does not market tell
us about what people are likely to employ as a term.

One
term, however, often proves fatal- quantity

However,
if parties have dealt with each other for the past ten years ordering 100
widgets at x-mas, then the court will likely set the quantity at 100.

Missing
price:

Courts
will not enforce (mostly services)

Use
fair market value

Use
industry standard

Get
a mediator

Remedies
and Estopple where agreements incomplete or indefinite:

Hoffman v. Redowl:P wanted to franchise store from ∆ and negotiated with the chain
to obtain and manage a store.∆
said everything fine and gave Π conditions that he buy a small store to
gain experience, and he put forth 18,000. Π did so, however this was not
enough.Π finally says he is
entitled to have the promise to give the franchise enforced.However, theterms of the franchise are not yet settled and we don’t know what the
damages would be, thus we use promissory estopple.

Π
was made a promise

Π
relied tohis detriment

∆
foresaw

Unjust

The remedy here is reliance.

Statute of Frauds

Requirement of a writing

This
is an additional requirement atop consideration

What is a writing? UCC 1-201 (39) gives definition of a
signature

Using any symbol executed or adopted with present intention
to adopt or accept a signed writing.

Includes a letterhead, stamp, e-mail

Writing
requirements that are not apart of the S of F:

2-205
Firm Offer

Restatement
§87(2)

These
are a replacement for consideration, however, the S of F must also have
consideration.

Catagories Inlcude:

Surety
agreements:A third party agrees to
be secondarily liable for the obligations of another (co- signer)

John
Deer seller willing to sell a tractor to a young buyer.The seller will sell to buyer, who will be
the primary, however, the rich old unlce must agree to be the co- signer (co-
obligor)

Consideration
exists for the uncle’s signature in the promise that if the nephew defaults on
his payments, the dealer will not repossess the tractor.

Exception
of Novation-Nephew will be released
from obligation if the unlce will agree to sign on.This is not an assurity agreement because at
no time are there more than two parties.

Exception
of main Purpose-When someone agrees
to be secondarily laible, is his main purpose to do so inviolved his own
interests.

For
example:Man runs major corporation and
wants to buy a bunch of scrap junk.The
seller says that because the company is not very solid, the man as an
individual must stand behind the promise to pay.The man is really protecting his interests,
thus is the mans promise as an individual is oral it will be enforceable
nonetheless

Contracts
not to be performed within one year of their making/ Contracts to be performed
outside of one year

Test:could you possible do it within one
year?If yes then the S of F does not
apply

Indefinite
term of time- the contract does not fall w/in S of F because by its term it
does not cover more than one year

It
does not have to be likely, such as building a nuclear power plant, only
possible

Full
Performance Exception:When one
party has fully performed the S of F does not apply.See Mason

It
does not matter whose performance would take more than one year, however, the
full performance exception only voids the S of F when the Π has fully
performed.

If
you have more than one provisions that fall within the SOF, then the Π’s
full performance will render one of the provisions free from the SOF, however,
all other provisions still fall within the SOF.

Ex:
You sell an object over $500 and a
doctor promises to effectuate a medical cure, and you want to sell balckacre,
and you plan to fertalize the land for two years.Each of these provisions is under the S of F
in this circumstance.

Hypo:If you have a
store and you need Christmas help in the store.You will pay the help $500 per day, and this is for next Christmas, so
it is over one year away.There is an
oral agreement to enter into the employment contract.This is within the S of F because because if
we do it TODAY, the contract cannot be completed until over one year from
today, even though the contract only comes within two weeks of labor.

Mason v. Anderson:Π loaned ∆ $5000 who was to pay $200 per month back to the
Π.Based on this payment schedule,
this would take more than one year and the S of F would apply to make the
re-payment enforceable.The ∆ dies
and the estate refuses to continue the repayment.Court says the S of F does not apply when one
of the parties has fully performed.

Sale
of land:

Exception:A lease for land that is not within one year
if not within the S of F.

Land
= minerals, fixtures, structures, as long as they are not severed.

If
the minerals are severed by the buyer then a land deal:

If
the seller severs the minerals or structures, they are treated as
goods

If
the buyer severs he minerals of structures, it is a land deal

Crops are always goods

Partial performance
exceptionapplies
for the buyer only

Must be extreme
reliance

Ex: Must
have been behavior that makes sense because there must have been a contract.
Thus if buyer comes onto land, moves there and builds a house, this partial
performance will not require a writing for the land sale.

Contract for sale of
goods over $500

If a lease, requires
$1000 and up

Any contract for 50,000
and up must have a writing

$500 does not have to be
the price expressed in the contract, Must only be s sale reasonable over
$500

If the sale of goods
over $500 exists, the S of F applies to the whole contract and not just the sale
of goods

Goods v. Service:

Goods = movable at the
time of identification of the contract for sale

Test:Which ever is the predominant aspect of the
agreement determines if it is a good or a service

Ex:Haircut but you also get shampoo and hair style
products.The service is the predominate
aspect and the S of F does not apply.

Even if the contract is
predominately service and the goods involved is over $500.

Construction contracts
are service agreements

Requirements of a
writing:

The contract need
only be signed by the party charged with the breach.:(thus if the party writes a letter backing out of an oral agreement for
over $500 worth of soy beans, this signed letter is good enough to satisfy the
S of F

The signature can
occur before or after the contract (see above example)

Does not have to be
signed with the intent to create a memorabilia of a contract, can simply be a
signed writing (can be a writing for other business purposes such as a receipt
or memorandum)

As long as the piece of
paper acknowledges the existence of a contract

Elements of the writing:

The writing must state
the parties,

Recognize the existence
of a contract,

Include essential terms

More than one document
that reflects essential terms is okay

All of the written
documents do not have to be signed, only the document reflecting the existence
of a contract must be signed

The unsigned written
documents reflecting the terms must on its face refer to the same transaction

Hypo:You have a signed writing that is an offer.
And another signed writing that accepts the contract.Thus you have offer and acceptance for a sale
of goods over $500, however you have two separate documents that shows a
contract.This is good enough.The contract is established by the two documents
and both are signed.

Hypo:If you lose the signed writing this is okay,
as long as there was at one time a writing along with the deal.

If a party admits the
existence of a contract, the S of F is overcome

If a party admits in a
pleading, or in oral testimony that there was a contract but it is not
enforceable because there was no writing, the argument is moot and the S of F
is overcome.

Borwn:Π wanted chair and ∆ denied any existence of a contract.

UCC 2-201 (3)
Customized Goods:

A K which does not
satisfy the requirements of a writing for goods over $500, but which is valid
in other respects is enforceable IF:

The manufacturer has
begin to make the goods, or

The manufacturer has
procured the means to make the goods

The goods are
specifically made for the buyer

If the seller admits the
K was made

If payment (partial pmt) has been accepted for
the goods.

S of F and estopple:Know these three situations:

A and B enter into land
deal.A tells B they need a writing and
B makes promise and date to execute writing.Before that time, B challenges the enforceability of the contract.à estopple will enforce the promise to make
a writing

Land deal.A tells B need writing.B says no we don’t need a writing the oral
agreement is good enough.B later
challenges the enforceability of the contract because it is within the S of F
and has no writing. à estopple will enoforce B’s promise that
they did not need a writing.S of F
becomes moot and does not apply based on B’s statement.

Land deal.A tells N we need writing,B agrees that S of F normally applies, but A
and B make a deal between themselves that the S of F will not apply. The
enforceability of the deal is at issue and B claims S of F.B cannot hide behind SOF.

More often SOF and estopple
is applied this way:Restatement §139

S of F is never an issue
spoken of, A arranges his affairs relying on the land deal and B claims no
contract because of S of F.

If all of your reliance
equities are in place you can use estopple.

The difference between
§139(2) and §90 is that §139 tells gives us factors how and when “injustice
requires a remedy”

The availability and
adequacy of restitution

How far out on a limb has
the relying party gone?

Where action or
forebearance corroborates evidence of the terms of a deal.

The reasonableness of the
action of forebearance

The extent the
forebearance was foreseeable by the promisor.

Infants

Void v. Voidable:A
contract is voidable at the election of a minor, however, unless the minor
chooses to disaffirm, the contract is not void.

Minors do not have the
capacity to enter into the contract and have the ability to disaffirm at
anytime.

It does not matter if the
adult did not know the minor was not of age

Misrepresentation
of age:minor says he is 19 and is really 15.

Minor will be liable in
tort

Minority: protect a minor in any situation, just as
we don’t make him liable for the ultimate pledge, we don’t make him responsible
for the lie upon the pledge.

Majority:Allows the dealer compensatory damages to put dealer where he was before
the deal was struck.Thus is the adult
is at any loss he can recover, but there is never any expectation (from what he
would have received if the contract were completed)

Texas Rule:applies estopple to the misrepresenting minor.Thus the minor will be estopped from denying
he is 19 and he will be held as an adult.But in using estopple the reliance upon the expectation must be
reasonable.

Restoration not
Restitution- To rescind a
contract, a minor does not have to return the value of the benefit
conferred.The minor must return
whatever he still has,but does not have
to repay what was lost to return adult to position he was in before the deal.

Ex:a
wrecked car (does not have to repair)

If a service or a
consumable the minor would give nothing back

Restitution available
for necessaries:(to avoid a chilling affect and allow minors
to be able to obtain necessaries such as food)

Necessary- legal
services, food, medical services

Not enforcing a
contract, only giving restitution

Ratification- when minor
reaches 18

When a minor makes a
subsequent promise to pay for a promise he made as a minor, there is no
consideration, and there does not need to be.The pledge is enforceable.

Ratification can be
expressed or implied.Implied
performance occurs through continued performance of the obligation after the
minor reaches adult age. (such as continued paying of a debt)

For a reasonable period
of time after reaching 18, the minor can renounce the contract

Co- Signer- most minors
must have a co-signer

Co-signer v. co-
promisor- a signer must sign while a promisor must only pledge.

Mental Incompetence

Cognitive
Test:key word

Mental
capacity can come and go, have good days and bad days, the question is the mental
capacity at the time the deal was struck.

Restatement §15- Mental Illness of defect:

A person incurs voidable contractual duties by entering into
a transaction if by reason by mental disease of defect

He is unable to understand in a reasonable manner the nature
and consequences of his actions, (cognitive test) OR

He is unable to act in a reasonable manner in relation to the
transaction AND the other party has reason to know of the condition

Where the contract os made on fair terms and the other party
does not know of the mental defect, the power of avoidance terminates to the
extent the contract has been so performed in whole or in part or the
circumstances have changed so that avoidance would be unjust.

Thus, under (a), the
other parties knowledge of the illness is irrelevant, while under (b) it is
necessary

Under this defense, the
seller is entitled to restitution even if the contract can be avoided

Contract must have fair
terms

The other party cannot
know she was siffering form defect

Adjudicated
incompetents:The burden shifts to the ∆ to prove
that she is fine, otherwise the burden is upon the party claiming mental
illness.

Intoxication

Restatement §16: Intoxicated persons:A person only avoids contractual duties by
entering into a transation if the ther party has reason to know that by reason
of intoxication

He is unable to understand in a reasonable manner the nature
and consequences of his action, or

he is unable to act in a reasonable manner in relation to the
transaction

This
is an objective test:the other party
must know or should have known

The
party must show he did not know what he was doing.

Unilateral Mistake

Mistake made by only one
of the parties to the K.

Restatement §153: When a
mistake of one party makes a contract viodable

Where the mistake of one
party at the time the contract was made as to a basic assumption on which he
made the contract has a material effect on the agreed exchange of
performances that is adverse to him if he does not bear the risk of the mistake
as stated in §154, and

The effect of a mistake
is such that enforcement would be unconscionable; or

The other party had
reason to know of the mistake or his fault caused the mistake.

Restatement §154:A party bears the risk of a mistake when:

The risk is allocated to
him by the agreement of the parties

He is aware at the time
the contract is made he has only limited knowledge with respect to the fact in
which the mistake relates but treats his limited knowledge as sufficient, or

The risk is allocated to
him by the court on the ground that it is reasonable in the circumstances to do
so.

First you must
have a material mistake:

Next, there are
three instances where the contract will be rescinded:

Material Mistake:whether or not it would seriously effect the parties willingness to
enter into the contract.If you have a
material mistakeà move to the three possible situations
where the party who made the mistake off the hook:

Unconscionable; or

Other party knew there
was a mistake; or

Other party caused the mistake.

In the event of reliance
a contract is enforced

Ex:The general contractor relied on a sub’s bid,
although that bid contains a mistake.Where the mistake has been substantially relied upon the contract will
be enforced.

Negligence in mistake v.
gross negligence and recklessness in mistake:

Where the party wishing
to rescind has made the mistake, and the mistake was only made in negligence,
there can still be rescincention.However, where the party was reckless or grossly negligent the contract
will be enforced.

Hypo:overall if the mistake was unconscionable, or
if the general contractor caused the mistake, or the general should have known
it was a mistake when he received the sub’s bid, AND the mistake was material
there is no contract.

Morta:Man in car accident claims mistake as to the terms of a
settlement and release where he was injured, however after he signed the
release he discovers he is more severely injured then he thought.He wants to rescind the release.He claims he is mistaken about the contents
of the settlement (in that he does not know it has a release).His mistake occurred because he did not read
it.Contract enforceable because under
§154 he bears the risk because he entered into the contract knowing he had
taken no measure to read and sign the contract.

Tow reasons this
is hard to prove:

1)this
is a unilateral mistake and harder to prove because unlike the mutual mistake,
unilateral has four elements of Material, other party knew; other party caused;
unconscionable

2)And
§154 says that if you approach the contract with KNOWN ignorance, you bear then
risk of your mistake.

Mutual Mistake

Key Phrase:“Mutual Mistake about a
material fact that is basic and material”

Restatement §152 (much
easier to get out of then §153):

Where a mistake of both
parties at the time a contract was made as to a basic assumption on which the
contract was made has a material effect on the agreed exchange of performances,
a contract is avoidable by the adversely affected party unless he hears the
risk of the mistake as stated in §154, and

The effect of the mistake
is such that enforcement of the contract would be unconscionable, or

The other party had
reason to know of the mistake of his fault caused the mistake

Restatement §154:A party bears the risk of a mistake when:

The risk is allocated to
him by the agreement of the parties

He is aware at the time
the contract is made he has only limited knowledge with respect to the fact in
which the mistake relates but treats his limited knowledge as sufficient, or

The risk is allocated to
him by the court on the ground that it is reasonable in the circumstances to do
so.

Requires a basic
assumption-Something the parties assumed to be true
about the property.Thus, in the case of
Lenawee, the parties assumed the property was OK for human habitation.

§154 In a mutual
mistake the seller bears the risk and cannot rescind the contract:If
you have a contract for land in Texas you would not expect the land to have
diamonds or pluntoium.If you were to
find that on your property and the seller thus wanted to rescind the contract,
he cant do so because he has assumed the risk because his ignorance is known to
him.

Ex:Little girl finds a diamond and brings it into town and shows to a rock
dealer.He gives her a dollar.She wants the rock after she learns it is a
diamond.Contract is valid because in a
mutual mistake the seller assumes the risk. (limited knowledge)

Beachcomber
v. Bostik:Rare dime sold for $.Both parties though the dime to be real,
however, it was not authentic.The buyer
could avoid the contract because although he failed to check the validity of
the coin, his failure to do so was no gross negligence, it was only negligence.Thus after determining a mistake is material,
we look to see if the mistake was a basic assumption.

Lenawee v.
County:Buyer and seller made a mutual mistake about
the sewage problem. On the land.Basic
assumption that land was OK for human habitation.

Hypo:for §154:Sell a minor a car, but he looked to be at least 20, you don’t ask.You use mistake as your defense, and say you
are unilaterally mistaken as to this material element of age.Under §154 you cannot escape the contract
because although you thought he was 20, you knew that you really did not know
how old he was because you didn’t ask.You assumed the risk.

Fraud

Elements:

Misrepresentation, or

Material fact

Reliance and change of
position upon the misrepresentation

Reasonable
interpretation of the misrepresentation

Actor knows he is
misrepresenting or does not care whether it is true of false.

Distinguish from tort- to get out of a contract, the
misrepresentation can be entirely blameless and innocent.All needed is that the misrepresentation was
of a material fact.

Tort

Contract

Material and a
misrepresentation that was intentional

Material
misrepresentation with reliance that was not necessarily intentional

Can occur when
someone knowingly makes a fraudulent statement, or makes a statement knowing
he does not know if it is true.

Morta:The
alleged misrepresentation was that the insurance company could only give him
$900 as a limit.However, the policy
limit was $1600. The court ruled this was not a reasonable interpretation of
the alleged misrepresentation because the industry often engaged in high low
bidding and wagering with settlements.

Constructive Fraud:

A confidential and trust
relationship

Victim must have been
the inferior party

There was a
misrepresentation (even an innocent one)

The superior party must show
the victim has not relied upon the misstatement

Thus when there is a
relationship where the ∆ owes to the Π a duty to disclose something
and he does not, there is constructive fraud.

Laidlaw v.
Organ: War just ended, and the New Orleans blockade
had been lifted.This fact was known to
the Π and not to the ∆.The
∆ buyer asks the Π is he knows anything about the peace
process.The Π is silent and says
nothing.The ∆ enters into the
transaction, however, the price should have been much higher because of
developments.The ∆ claims the
Π should have told him, and that the Π knowingly deceived him.

Holding:Contract still valid because the ∆ entered into the contract with
out bothering to determine the answer to his inquiry.

On the other
hand,

Vokes v.
Author:House has termites, but that fact was not relayed
to home buyers.There was no actual
false statement, just a silence or avoidance when asked if there were any
termites.This case is distinguished
from the above case in terms of the reasonable person.Above the reasonable person would have waited
for an answer, here, the reasonable would gather from a statement,
“Termites?Get outta here!”Also, when asked, the home owners had said
that a ripple on the floor was caused by water damage, however, they knowingly
gave information they KNEW they did not know what it was.This is a misrepresentation.

Types of
misrepresentation:

Half truth:If
buyer says, “are there any termites in the house?” and owner says, “I would be
the first to know.”

Rule:the half truth can be used to disguise the
real truth and be a misrepresentation

Concealment: can
be a misstatement in itself.In Vokes,
a plant covered the ripples in the floor plaster concealed wall damage.Concealment is a misrepresentation in itself.

Misrepresentation must
always relate to a factual matter, and a material fact.Thus a promise to do something in the future
is not a factual matter.“I will give
you my car on Thursday”

This does not apply to a
fiduciary relationship however, where there has been an undue influence.

Promissory Fraud:“I
will give you my car Thursday.”When you
make such a promise you are also saying you have the present intent to do that
thing on Thursday.Thus if you don’t
have that intent in the beginning, then you have knowingly made a promise you
have no intention of keeping.You are
lying at the time of the promise about your current mental state.This is promissory fraud

Undue influence Three
types:

Where there is a
confidential relationship and someone took unfair advantage of the weaker
party.

Where you exploit the
mental weakness of another and take unfair advantage

Here you don’t have to be
crazy, just shakey, and if someone takes unfair advantage of this the contract
can be avoided and rescinded

Distress of the victim
is exploited in a way to take unfair advantage

Case where employee in a
jail for allegedly molesting a student in school and his boss at that time asks
his to enter into an employment agreement with them.He successfully claimed unfair advantage in
moment of distress.

Vokes v.
Murray:The Π takes many dance lessons from the
dance studio paying extreme amount of money, eventually claiming inducement,
suggestion of false hood, suppression of truth, and she was influenced
unwittingly by constant and continuous flattery.

Is there a fiduciary
relationship?NO dance instructor and
student is not fiduciary

Was Π under
duress?NO

Did ∆ take unfair
advantage of mental weakness- possibly

Undue influence:

Must distinguish
between undue influence and economic duress

undue influence =
unfair persuasion

The ∆ has a
toughwer standard for unfair persuasion

∆ must be
under the domination of the Π

Undue influenceà the ∆ is so weak he would not be able to refuse the
deal.

If there is a
relationship of confidence, you must disclose something material

Duty to disclose:Informatiion that if the consumer had, he
would not have entered into the contract

Termites is considered a
material thing mandating disclosure

There is no duty to
disclose if there is an HIV infection.

Duress

Unwarranted action taints
an action in such a way that a contract will be unenforceable

Hypo:you want to sell your car for $20,000.You also have a gun pointed at your
head.This is a deal made under duresss.We avoid contracts from which a wrongful
threat produced.

Elements:

Threat

Wrongful

The wrongful threat
produces the contract

The threat must in itself
create and be the reason the contract was formed.Ex:You offer a car for $17 and if she buys it you would not kill her.She would have bought the BMW even if there
was no threat.

The wrongful threat
capitulates reasonably

When you have no one to
blame but yourself.If you don’t buy a
car for 23,000 you will kick a cat.

Economic
Duress

Austin v,
Lowell:Lowerll was going to supply parts to the Navy
and subcontracted with Austin.Austin
wanted whole renewed contract and said they would cancel their present shipment
due unless Lowerell gave it to them.Lowerell tried to find another company who could deliver same parts in
time to neet Navy deadline but were unable to do so.Lowerell gave Austin second contract.

Distinguishing
this case from Alaska Packers:In
that case, performance had not yet occurred and money had not changed
hands.Thus because there was already a
pre- existing legal duty there was no consideration and the boss did not have
to pay the fishermen.Here however,
there has been performance and we thus have a duress issue.(If the boss had paid the fishermen it as
well would be a duress issue).Lowell
performed here however because they had a contract to fulfill with the
navy.Austin says that Lowell should
have claimed breach of contract and not performed.Elements:

Element 1:Was threat wrongfulàRule:if you are
threatening a breach to leverage a deal, this is wrongful.

Element 4:Was his capitulating reasonable (performance)à yes because Lowell feared they may lose a contract with the
Navy if they did not perform.

Machinery v.
Steel:There was a threat but it was not
wrongful.The threat was not to renew
the contract fro next year,This is not
wrongful, even if it would have resulted in the companies loss in
millions.It is the companies right not
to renew.

Wrongful threat:
Restatement § 176:

A threat is wrongful if:

What is threatened is a
crime or a tort and the threat itself would be a crime or a tort if it
resulting in obtaining property

What is threatened is
criminal prosecution

What is threatened is
the use of civil process and the threat is made in bad faith

the threat is a breach
of the duty of good faith and fair dealing under a contract with the recipient.

A threat is improper if
the resulting exchange is not on fair terms, and

the threatened act would
harm the recipient and would not significantly benefit the party making the
threat

The effectiveness of the
threat inducing manifestation of assent is significantly increased by prior
unfair dealing by the party making the threat, or

what is threatened is
otherwise a use of power for illegitimate means.

What this means:If
it is not a fair deal, then the concern over the wrongfulness of the threat
becomes easily wrongful if the deal itself is not fair.

The take it or leave it
threat is not generally wrongful

Unconscionability

Court will not enforce a deal due to public policy

UCC 2-302

If the court as a matter
of law finds a contract to be unconscionable at the time it was made, the court
may refuse to enforce the contract, or it may enforce the remainder of the
contract without the unconscionable term, or it may so limit the application of
any unconscionable term as to avoid any unconscionable result.

When it is claimed or
appears to the court that the contract or and term thereof may be
unconscionable, the parties shall be afforded a reasonable opportunity to
present evidence as to its commercial setting, purpose and effect to aid the
court in making the determination.

Determined at time K was
made; must allow evidence of the commercial setting (walker show his
store was in the ghetto and this was then only way he would even profit); and
courts have flexibility in declaring enforceability (whole K; partial K;
entirely unenforceable)

Up until now we assume a
contract is created between two equally informed individuals however contracts
are too long, dense, complicated, favorable to drafter, composed in legal
terms.

Restatement § 208
Unconscionable contract or term (does the same as UCC but does not apply to
goods)

If unconscionable at
time made

Court may refuse to
enforce K

Or may enforce partial
remainder without term;

Or may limit the application
of an unconscionable term to avoid any unconscionable result

Form contracts rules:

Insisted about up front
requirements that must spell out and make sure the party understands the terms-
voluntary acceptance of the terms

Cutler v.
Latshaw: Attornye and confession of judgment
agreement.She agreed to forego certain
defenses she may have had to liability.She already admits to liability in the event that certain things occur.Ex:if
she is late on a payment that is the end of the dispute and she is liable.The court allows these provisions, BUT the
provision must be

VOLUNTARY

Unconscionability and
two prongs:

Procedurally
unconscionable- lack of notice, lack of awareness (party did not speak
language) or something about the way the contract took place

You must ask, was the
party in a position to oppose the term?

Substantially
unconscionable- whether or not the deal was surprisingly lopsided, was it an
UNFAIR SURPRISE?(high price is usually
not substantive)

Price rule:

if price is not at
least 2 ½ times the price normally charged, it is not potentially
unconscionable.

Weaver v.
American Oil:The lesee signed a contract saying he was
responsible for any negligence occurring on the property even the lessors
negligence and even negligence which injures the lesee.He is severely burned when the lessor is
negligent re- filling the gas tanks.Is
the clause enforceable?NO, although Weaver
did not read the contract which included the clause of the lease, he can argue
he was ambushed.

Restatement §211: form
agreements section (3)

Where the other party
has reason to believe that the party manifesting such assent woldnot do so if
he knew that the writing contained a particular term, the term is not part of
the agreement.

This provision gives the
weaker party what he thinks he has bargained for.Thus the party trying to slip in a hidden
clause will have the term vided and still be held to the contract the weaker
party thinks he is signing.

Warranties

Warranty of title:UCC 2-312

There is a promise you
will sell a good it is implied that

The title shall be good,
and its transfer rightful, AND

Disclaim title expressly
if by saying you might not have the title

(for ex:you think you own pap’s tractor, but b/c he
dies you are not exactly sure who owns it now)

UCC 2-313- Express
Warranty

UCC RULE:

Any affirmation of
fact or promise relating to the goods creates an express warranty that the
goods shall conform to the affirmation or promise

Any description of
the goods

Any sample or model
made part of the basis for the bargain creates an express warranty the goods
shall conform to the sample or model

Not necessary to use
warrant or guarantee

Not necessary for
seller to have intent to make warranty

Sellers opinion is
not a warranty

Hypo:What do we mean by a car?I will sell a car for 17,000 but seller only
hands him the keys, Technically this is part of the car right?Under he express warranty, car means more
than keys.

The precise
meaning of a car is not clear, however there is a limit.

A 1969 mustang
with a Buick engineà yes, a breach of warranty

A 1969 mustang
when you bought a 1967 mustangà yes a breach of warranty

A mustang with a
buick antennaà no this is not a breach because reasonable
consumers know that after a certain number of years and miles on the car it
would be reasonable to expect replacements.

The affirmation of fact
need not be verbal

Ex:the odometer in the car says 40,000, that is
a manifestation that the car has that number of miles on it.

But if you were looking
at the car in the showroon and underneath the left front fender someone had
written in marker MPG = 53 city.But you
don’t get 52 MPG in the city and claim breach of warranty.NO, this was not a reasonable manifestation

Opinions are not express
warranties

Puffing not fact (hard to
test)

RULE:if you can test the truth of falsity of a
statement, it is usually fact

If the words are a fact
statement in one view and an opinion in anothers view, the more reasonable view
will determine if it is fact or opinion

Hypo:go to the store and buy a jet ski and on the
wall the seller has a certificate certifying the seller has passed jet ski
training.The buyer gets a jet ski and
says there is a breach in express warranty.Just because there is a false statement on the wall it does not relate
to the goods.This is where
misrepresentation and warranty diverge.

Hypo:buy a dune buggy and seller tells you how fun
on the beach but you find they are illegal on the beach, No breach because this
is not a statement about the quality of goods

A sample is considered a
statement of fact, and if your good is not like the sample you have a breach of
express warranty

Hypo:What if you have already bought the goods and
the seller promises they goods have a color guard treatment.This was not inducing you to enter into the
contract, because you have already done that, but it is still considered part
of the deal

Promise can be made
after purchase made, does not have to induce the buyer

Implied warranty of
merchantability UCC 2-314

UCC RULE:

·Seller
must be a merchant

·Fit
for ordinary purposes for which goods are used

·Adequately
contained, labeled and packaged as the agreement may require

·Conform
to the promise of affirmations of fact on the packaging

·Other
implied warranties may arise from course of dealings or usage of trade

Seller must be a
merchant (buyer does not have to be)

We don’t worry about how
it was made, we worry about what the warranty contains

Hypo:when you buy a pencil, it is supposed to
write, erase, be sturdy, grasp.There
are qualities we associate with a pencil, and if it does not do those things we
find it to be an unmerchantable pencil.

Must be fit for their
ordinary purpose

Hypo:go to church yard sale and ask housewife if
the lamp still works.She says yes its
fine and its merchantibleYou take it
home and it burns down your house.You
sue for breach of implied warranty.NO
because she is not a merchant.BUT she
will be in breach of express warranty because she expressly said the lamp was
merchantable.Thus, because express
warranty does not have a merchant requirement, there is a breach.

Hypo:Seller at a cotton gin decides to clean out
his office and sells a desk.He is not a
merchant of the desk, thus it would be wise to get an express warranty about
the quality of the goods.

Hypo:You opn up a can of peas and its carrotsà unmerchantible because its not peas

Hypo:painting your bedroom sea foam green, but you
still have half of one wall.You go back
to seller and they give you another can, but it’s a shade off from the
rest.This is unmerchantible paint
because we don’t require sea foam to be a particular, but we do require
they be uniform

There are centain kinds
of products that a merchant implicitly promises conformity

Covers used items as well, although the reasonable
expectations are different than for the new item.The expectations mostly are that the
product will not cause personal injury.

Price is an excellent index of the goods quality
and what we should expect of its performance

Personal injury:There are usual expectations and if the product fails and causes
personal injury, a court will be inclined to liberally construe the reasonable
expectation

Hypo:Sell a gun for $5 but it backfires.Seller says he only sold it for $5 and it
would be unreasonable to expect anything else.Courts disagree

Natural v. Foreign
Substance- is the product
merchantiable?

Substances found in clam
chowders and chilies.

Reasonable expectation
Test:what would the reasonable person
expect to find in their clam chowder?

RULE:if the minority of people that will be
adversely affected by the product, the product is merchantiable if that
minority is given fair warning of the danger to the minority

Ex:MSG in Chinese food.

Implied Warranty of
Fitness for a particular purpose (UCC 2-315)

Seller must know of the
buyers purpose

Seller has reason to
know that the buyer is relying on the sellers skills to select or supply

Buyer does in fact rely

Goods are unfit for
purpose

Not limited to merchants

Hypo:man buying bolts for a bridge, man tells
seller this.The seller might not know
that the buyer is relying on his judgment of the bolts.

Hypo:say you want to use a chemical to spice a
carrot cake.You tell the buyer what you
are trying to do and the buyer says, “I have just the thing for you” But it
does not perform the task as you described the task to the buyer.The chemical, however, works as it would for
what is normal purpose would be.

1)The
seller must know what your particular purpose is

2)The
seller must know he is being relied upon

a.ExLthe buyer describes to seller his idea of a
homemade irrigation.The seller thinks
to himself tubing that thin will freeze in winter but sells anyway.Tubing does freeze and buyer claims breach of
Warranty of fitness.No breach because
the seller did not know the buyer was relying on him.